Energy Save Annual Report 2022

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FY2022 Annual Report · Energy Save

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ENSTAR GROUP
ANNUAL
REPORT
2022

Realising Value

Financial Results
(in millions of U.S. dollars, except ratios and per share data)

Return on equity
Adjusted return on equity*

Run-off liability earnings
Adjusted run-off liability earnings*

Total investment return
Adjusted total investment return*

Net (loss) earnings attributable to Enstar ordinary shareholders

Book value per ordinary share
Adjusted book value per ordinary share*

2022

(15.6)%
(1.1)%

6.3 %
3.9 %

(9.0)%
(0.2)%

$(906)

$246.20
$243.09

2021

7.9 %
10.1 %

3.9 %
3.6 %

2.0 %
3.6 %

$502

2020

38.4 %
41.9 %

0.4 %
3.5 %

14.6 %
12.4 %

$1,723

$329.20
$323.43

$293.97
$288.56

*Non-GAAP financial measure, refer to pages 64-70 of our Annual Report on Form 10-K for the year ended December 31, 2022 for explanatory notes and a
reconciliation to the most directly comparable GAAP measure for the years ended December 31, 2022, 2021 and 2020.

Dear Fellow Shareholders,

We recently celebrated our 30-year anniversary and are proud to have pioneered run-off
solutions as a mainstream part of the insurance industry. Over this period, we have completed
116 transactions covering varying size, complexity and lines of business, while successfully
navigating numerous insurance cycles. We intend on continuing to provide new and
innovative risk management and capital release solutions to our global partners long into the
future. We maintain our nimble approach and are well-capitalised to take advantage of the
many opportunities in an ever-growing sector of the market. As always, we remain committed
to delivering long-term value for our shareholders.

We are rooted in a marketplace that has seen significant inflows of alternative capital,
increased competition and the entrance of opportunistic start-ups in the legacy market. At the
same time, we have seen competitors retrench and pull away. It is a good reminder that the
barriers to success are very high, and they centre around discipline, a strong view towards risk
management and the requirement for sustained operational excellence over the long term.
Our decades of experience and investment in all these areas distinguishes us from others in
the P&C run-off industry.

2022 Recap
2022 was a year of positive developments for Enstar despite the challenging macro
environment. The performance of our core run-off business was again strong, and the
resilience of our business model evident. Our highly differentiated claims function, strong M&A
and investment capabilities, operational and disciplined risk selection process, and financial
strength have enabled us to continue as the dominant player in the legacy market.

Our ability to deliver consistent and favourable results for our stakeholders is a testament to
the excellent work of the entire Enstar team. To call out a few notable highlights:

• We generated Run-off Liability Earnings (“RLE”) of $756 million, compared to $403 million
for 2021. On an adjusted basis, which removes the impact of changing interest rates on
certain of our reserves and other adjustments as outlined in our Annual Report on Form
10-K, we recorded $489 million in 2022 versus $381 million in 2021.

• We acquired $2.7 billion of total liabilities, including completing the industry’s third-largest
non-life run-off reinsurance transaction in history with Aspen Insurance Holdings (“Aspen”).
This loss portfolio transfer (“LPT”) agreement significantly expanded and diversified our
portfolio while further cementing our status as the world’s largest legacy market reinsurer.

TOTAL LIABILITIES ACQUIRED 1,2
(in billons of U.S. dollars)

(cid:25)(cid:30)(cid:31)

(cid:26)(cid:30)(cid:31)

(cid:27)(cid:30)(cid:31)

(cid:28)(cid:30)(cid:31)

(cid:29)(cid:30)(cid:31)

(cid:31)(cid:30)(cid:31)

(cid:28)(cid:31)(cid:29)(cid:24)

(cid:28)(cid:31)(cid:29)(cid:23)

(cid:28)(cid:31)(cid:28)(cid:31)

(cid:28)(cid:31)(cid:28)(cid:29)

(cid:28)(cid:31)(cid:28)(cid:28)

Represents gross loss reserves,
defendant A&E liabilities.

Excludes gross loss reserves
and future policyholder
benefits acquired via the
acquisition of Enhanzed Re.

We are proud to
have pioneered
run-off solutions as
a mainstream part
of the insurance
industry. We maintain
our nimble approach
and are well-
capitalised to take
advantage of the
many opportunities
in an ever-growing
sector of the market.

Run-off Liabilty Earnings

$756m

Adjusted Run-off
Liabilty Earnings*

$489m

Total Liabilities Acquired

$2.7bn

* Non-GAAP financial measure. Refer to pages 64-70 of
our Annual Report on Form 10-K for the year ended
December 31, 2022 for explanatory notes and a
reconciliation to the most directly comparable GAAP
measure for the year ended December 31, 2022.

Annual CEO letterFrom Dominic Silvester, Chief Executive OfficerWe remain
comfortable with our
asset allocation and
expect to generate
additional value
over the long term,
despite current
market challenges.

Our operational and RLE results were solid contributors to our overall performance. However,
similar to other (re)insurance companies, much of our investment portfolio is allocated to fixed
income securities, and our results were adversely impacted by the rapid rise in interest rates.

For the year, we recorded a net loss attributable to Enstar ordinary shareholders of $906
million, negative return on equity (“ROE”) of 15.6% and negative adjusted ROE* of 1.1%. Book
Value Per Share (“BVPS”) decreased by $1.6 billion to $246.20 per share from $329.20 per share
as of December 31, 2021, largely driven by unrealised losses on our fixed income portfolio.
These assets are closely matched to the duration on our claims liabilities and provide liquidity
for payments as they come due. As such, we consider ourselves predominantly buy-and-hold
investors and expect to benefit from the reversal of unrealised losses as the securities we hold
approach maturity.

Beyond our core fixed income portfolio, we have a well-diversified allocation with respect to
our non-core or risk assets, and take a medium to long-term view on performance. Our risk
assets return was also adversely impacted given double-digit losses in the broader equity
markets. That noted, we remain comfortable with our asset allocation and expect to generate
additional value over the long term, despite current market challenges.

CHANGE IN BVPS THREE- AND FIVE-YEAR AVERAGE

(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23)(cid:22)(cid:21)(cid:20)(cid:25)(cid:19)

(cid:13)(cid:16)(cid:12)(cid:14)

(cid:18)(cid:17)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23)(cid:22)(cid:21)(cid:20)(cid:25)(cid:19)

(cid:18)(cid:17)(cid:16)(cid:15)(cid:14)

(cid:31)(cid:30)(cid:29)(cid:28)(cid:28)(cid:27)(cid:26)(cid:28)(cid:25)(cid:29)(cid:24)(cid:23)(cid:22)(cid:28)(cid:29)(cid:25)(cid:21)(cid:28)

(cid:20)(cid:19)(cid:22)(cid:28)(cid:27)(cid:26)(cid:28)(cid:25)(cid:29)(cid:24)(cid:23)(cid:22)(cid:28)(cid:29)(cid:25)(cid:21)(cid:28)

ROE THREE- AND FIVE-YEAR AVERAGE

(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23)(cid:22)(cid:21)(cid:26)(cid:20)

(cid:31)(cid:19)(cid:18)(cid:19)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23)(cid:22)(cid:21)(cid:26)(cid:20)

(cid:18)(cid:17)(cid:16)(cid:15)(cid:14)

(cid:31)(cid:30)(cid:29)(cid:28)(cid:28)(cid:27)(cid:26)(cid:28)(cid:25)(cid:29)(cid:24)(cid:23)(cid:22)(cid:28)(cid:29)(cid:25)(cid:21)(cid:28)

(cid:20)(cid:19)(cid:22)(cid:28)(cid:27)(cid:26)(cid:28)(cid:25)(cid:29)(cid:24)(cid:23)(cid:22)(cid:28)(cid:29)(cid:25)(cid:21)(cid:28)

RLE THREE- AND FIVE-YEAR AVERAGE

(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23)(cid:22)(cid:21)(cid:20)(cid:25)(cid:19)

(cid:14)(cid:17)(cid:13)(cid:15)

(cid:18)(cid:30)(cid:31)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23)(cid:22)(cid:21)(cid:20)(cid:25)(cid:19)

(cid:18)(cid:17)(cid:16)(cid:15)

(cid:31)(cid:30)(cid:29)(cid:28)(cid:28)(cid:27)(cid:26)(cid:28)(cid:25)(cid:29)(cid:24)(cid:23)(cid:22)(cid:28)(cid:29)(cid:25)(cid:21)(cid:28)

(cid:20)(cid:19)(cid:22)(cid:28)(cid:27)(cid:26)(cid:28)(cid:25)(cid:29)(cid:24)(cid:23)(cid:22)(cid:28)(cid:29)(cid:25)(cid:21)(cid:28)

* Non-GAAP financial measure. Refer to pages 64 – 70 of our Annual Report on Form 10-K for the year ended December 31, 2022 for
explanatory notes and a reconciliation to the most directly comparable GAAP measure for the years ended December 31, 2022, 2021 and
2020 and pages 258 - 261 of this 2022 Annual Report for the years ended December 31, 2019 and 2018.

Annual CEO letterFrom Dominic Silvester, Chief Executive OfficerSustainable and Profitable Business Model Drives
Shareholder Value
While many may view run-off reinsurance as a complex industry, our business model is simple,
consistently generates value and is largely self-financed through capital redeployment. There
are three core components:

1. Source, Diligence and Acquire Portfolios

We leverage our in-house expertise and industry relationships to source and evaluate
opportunities. Our experienced claims experts partner with our M&A team throughout this
evaluation. In most cases, we do not outlay any cash consideration to the cedant when
acquiring a portfolio.

2. Actively Manage Liabilities and Investments

Our claims team focuses on settling claims faster and striving for better-than-expected
outcomes. Our investments team builds bespoke portfolios to match expected cash flows
and generate superior risk adjusted returns.

3. Redeploy Capital

Upon settlement of claims, capital is released and made available for the next set of
opportunities, thus completing the recycling of capital while creating returns through
the process.

ENSTAR RUN-OFF BUSINES MODEL

In 2022, we fortified
our status as the
partner of choice for
many of the world’s
leading (re)insurance
groups. In particular,
one deal exemplifies
our robust M&A
capabilities, and that
is the completion
of our $3.1 billion
LPT agreement with
Aspen.

(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23)(cid:22)(cid:21)(cid:22)(cid:20)(cid:26)(cid:19)(cid:27)(cid:26)
(cid:18)(cid:19)(cid:17)(cid:24)(cid:16)(cid:27)(cid:15)(cid:29)(cid:22)(cid:28)(cid:26)(cid:24)(cid:14)(cid:30)(cid:28)(cid:13)(cid:12)(cid:30)(cid:21)(cid:22)(cid:30)(cid:11)

(cid:16)(cid:27)(cid:13)(cid:22)(cid:10)(cid:26)(cid:21)(cid:9)(cid:24)(cid:8)(cid:18)(cid:19)(cid:18)(cid:20)(cid:26)(cid:24)(cid:7)(cid:22)(cid:18)(cid:6)(cid:22)(cid:21)(cid:22)(cid:13)(cid:22)(cid:26)(cid:11)
(cid:18)(cid:19)(cid:17)(cid:24)(cid:5)(cid:19)(cid:10)(cid:26)(cid:11)(cid:13)(cid:4)(cid:26)(cid:19)(cid:13)(cid:11)

(cid:3)(cid:26)(cid:17)(cid:26)(cid:2)(cid:21)(cid:30)(cid:9)(cid:24)(cid:1)(cid:18)(cid:2)(cid:22)(cid:13)(cid:18)(cid:21)

In 2022, we fortified our status as the partner of choice for many of the world’s leading (re)
insurance groups. In particular, one deal exemplifies our robust M&A capabilities referred to
earlier, and that is the completion of our $3.1 billion LPT agreement with Aspen. That single
deal included onboarding approximately 38,000 claims, or an additional 40% claims count.
That’s a significant undertaking and a remarkable operating achievement.

We also completed an LPT agreement with Argo Group International Holdings, assuming net loss
reserves of over $700 million, and completed a reinsurance-to-close transaction with Probitas
Managing Agency Limited, demonstrating our commitment to servicing the Lloyd’s market.

We substantially completed the unwind of Enhanzed Re’s reinsurance contracts with our partner
Allianz SE. While this venture was successful, with an inception-to-date return in excess of 23%
on our investment, we did not see the future scalability of the platform in its current form. We
remain open to other assumed life opportunities should they provide an attractive diversified
earnings profile and the right risk-reward balance.

iii

Annual CEO letterFrom Dominic Silvester, Chief Executive Officer

Experience, diligence
and discipline lead
to effective claims
management and
extraction of value
from our acquired
loss portfolios.

Actively Manage Claims – The Enstar Effect
Our ability to consistently drive better outcomes through claims management is what we call
the “Enstar Effect”. It is essential to our culture and deeply embedded within every aspect of
our claims management operations throughout the lifecycle of the businesses we manage.

The Enstar Effect commences from the moment we perform due diligence on a potential transaction.

Once we acquire a book of business, we triage and review the portfolio and immediately define
settlement strategies on a claim-by-claim basis. We then turn our attention to executing on
our core principle of resolving claims expeditiously and equitably. This speed and efficiency
are key tenets of how we create value, which also serves the interests of our policyholders.

We know from decades of experience in all facets of the claims process, including expertise
in litigation, that claims typically do not improve with age. And in the current inflationary
environment, early assessments are more critical than ever.

The Enstar Effect is clearly visible in our performance. For example, on workers’ compensation
and asbestos claims, we have surpassed the industry by an average of 600 to 800 basis points
since 2017, and on casualty by 200 basis points. Experience, diligence and discipline lead to
effective claims management and extraction of value from our acquired loss portfolios.

DRIVING SUPERIOR CLAIMS OUTCOMES IS A MAJOR COMPETITIVE ADVANTAGE
Enstar Loss Reserve Outperformance vs US P&C Industry 3,4 Five Years Ended 2021

(cid:1)(cid:6)(cid:2)(cid:4)

(cid:7)(cid:6)(cid:5)(cid:4)

(cid:3)(cid:6)(cid:2)(cid:4)

(cid:31)(cid:30)(cid:29)(cid:30)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:27)(cid:23)(cid:22)(cid:27)(cid:26)(cid:21)(cid:20)

(cid:11)(cid:17)(cid:28)(cid:10)(cid:30)(cid:28)(cid:23)(cid:9)(cid:25)(cid:24)(cid:17)(cid:12)(cid:8)(cid:30)(cid:29)(cid:23)(cid:27)(cid:21)(cid:13)(cid:17)(cid:29)

(cid:19)(cid:23)(cid:18)(cid:30)(cid:23)(cid:21)(cid:17)(cid:23)(cid:25)(cid:16)
(cid:15)(cid:29)(cid:14)(cid:13)(cid:28)(cid:17)(cid:29)(cid:12)(cid:30)(cid:29)(cid:21)(cid:27)(cid:26)

Actively Manage Investments
We have a robust investment allocation process for acquisitions. We assess current market
conditions and allocate to investment opportunities in-line with our long-term objectives
while taking various constraints into consideration. We utilise external asset managers who
have best-in-class asset management capabilities across a wide variety of asset classes,
enabling us to create bespoke portfolios for each transaction.

3 We calculated the change in estimates of net ultimate losses for the last 5 calendar years divided by average net loss reserves on our three
largest lines of business within our Run-off segment (General Casualty, Workers’ Compensation and Asbestos & Environmental), and compared

the results to the total of the Combined US P&C Industry (source: US Annual Statements through SNL). To remove any potential distortions due

to mix of accident years, we have matched the industry reserves’ accident-year-weighting to match Enstar’s.

4 The weighted average reduction in estimates of net ultimate losses divided by average net loss reserves by line of business for the five-year
period ended 2021 was as follows: i) General Casualty –Enstar (0.7)%, Industry (3.2)%; ii) Workers’ Compensation –Enstar 10.3%, Industry 4.4%;

and iii) Asbestos & Environmental –Enstar 0.4%, Industry (8.1)%.

Annual CEO letterFrom Dominic Silvester, Chief Executive OfficerOur business model
finances itself as we
paid over $1.7 billion
of net loss reserves
in 2022, freeing up
capital to deploy.

Strong Capital
We began 2022 with a solvency capital ratio of 179% and closed with an estimated ratio in
excess of 200%. Our business model finances itself as we paid over $1.7 billion of net loss
reserves, freeing up capital to deploy elsewhere.

We also had the excess capital to opportunistically repurchase $341 million of our common
shares during the first quarter of 2023. Active capital management is critical to us, and we
remain focused on deploying capital to the most value-accretive opportunities for our
shareholders.

From a capital markets perspective, we continue to maintain strong access and in January
2022, we took advantage of a favourable market and proactively issued $500 million in 5.5%
Fixed-Rate Reset Junior Subordinated Notes due 2042, before the rapid increase in rates. We
have no debt maturities in the near term and currently, all of our debt is fixed at attractive
costs of capital. Our balance sheet remains strong and is well-positioned for the future.

ESG & Sustainability
We strive to build a sustainable business that positively contributes to the health and
wellbeing of people, societies, and the environment. The way we think about ESG continues
to evolve and, in 2022, we made further advancements to our ESG agenda and credentials,
which demonstrates our appreciation of the importance ESG has to the long-term delivery of
shareholder value.

The improvements are evident in our organisational commitment to combat climate change,
to actively consider ESG within our investment portfolio, and to nurture human capital. It’s
a leadership priority to make these goals part of our acquisition and investment strategies,
and we will do so as an investment in the global community, but also in our Group’s long-
term value. For further detail, please refer to our separate ESG report which will be released
later this month on the Sustainability section of enstargroup.com. The report includes seven
notable accomplishments:
• We recruited our first Head of ESG;

• We selected Climate Action and Gender Equality as the core UN Sustainable Development

Goals on which our efforts will focus;

• We baselined our greenhouse gas emissions;

• We continued our climate-change scenario analysis work;

• We developed a detailed long-term strategy to cover diversity, equity and inclusion;

• We formalised a new volunteering policy; and

• We strengthened our ESG reporting and risk management processes.

We continue to discover how sustainability is complementary to the performance of financial
businesses with a long-term horizon, and, with that knowledge, are taking actions to further
align ourselves.

Annual CEO letterFrom Dominic Silvester, Chief Executive OfficerI am confident
that we are better
positioned with
more attractive
opportunities today
than ever before to
deliver excellence
to our partners and
long-term value to
our shareholders.

Seamless Leadership Transitions
We are fortunate to have built an experienced executive team that truly showcases our bench
strength, consisting of highly seasoned professionals who are ideally qualified to continue
Enstar’s track record of growth. In March 2023, Paul O’Shea, our long-time Group President
who joined us in 1994, retired after 28 years. He remains on our Board and we are very
thankful for his service and support over the decades.

Orla Gregory, who has served in numerous senior roles at Enstar over the past 20 years and is
a Board member, succeeds Paul as President. David Ni, our Chief Strategy Officer, who joined us in
2019 with a focus on M&A, has assumed Paul’s responsibilities in this critical area of our business.

We also announced two other changes to our Executive Team in March: Paul Brockman
was promoted to Chief Operating Officer in addition to his role as Chief Claims Officer, and
Matthew Kirk has taken over Orla’s former role as Chief Financial Officer, following his role as
Group Treasurer and Head of Investor Relations.

We have tremendous confidence in this group’s ability to step up into larger leadership roles
at a critical time in our development.

Looking Ahead – Building on our Momentum
We entered 2023 on the back of a strong fourth quarter performance and, during the first
quarter, we announced two new legacy acquisition deals – a $1.9 billion LPT with leading
insurance group QBE, and an AUD$360 million (USD $245 million) deal with RACQ Insurance
Limited. This is a strong start to the year and reinforces our leading position in providing LPT
solutions, which have become a mainstream tool for active capital management by robust
insurers who wish to focus on today’s opportunities.

The QBE transaction, which is our second significant collaboration with this partner, is unique.
Not only are we providing cover for discontinued lines, we are also delivering our expertise
on seasoned liabilities within ongoing lines of business as a source of value creation. This
transaction is a testament to our creativity and entrepreneurial spirit as an organisation to apply
our expertise to the ever-changing needs of our clients and partners. I am confident that we are
better positioned with more attractive opportunities today than ever before to deliver excellence
to our partners and long-term value to our shareholders. Importantly, we maintain a strong M&A
pipeline with appropriate capital for additional accretive transactions, yet we remain highly
disciplined and are content to walk away from opportunities that don’t meet our requirements.

I wish to thank every Enstar employee around the world for your dedication, commitment,
expertise and hard work. You make Enstar the legacy markets leader. I also thank our
shareholders for their loyalty, and our business partners for their trust. I wish prosperity and
good health for you all.

On a final note, I want to mention Nimrod “Rod” Frazer, former Chairman and CEO of Enstar
Group, Inc., who sadly passed away in March of this year. Rod was instrumental in investing in our
Castlewood business in 2000, and in the 2007 merger transaction that formed the Enstar of today.
Rod’s business achievements, acumen and determination are the stuff of legend. However, Rod
was more than an incredible businessman, he was a great friend and champion of Enstar over the
years, and we are so grateful for his contributions to our success. Thank you Rod, Rest in Peace.

Sincerely,

Dominic Silvester
April 21, 2023

Cautionary Statement
This letter contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements regarding the intent, belief or current expectations of

Enstar and its management team. Investors are cautioned that any such forward-looking statements speak only as of the date they are made, are not guarantees of future performance and involve risks and uncertainties,

and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Important risk factors regarding Enstar can be found under the heading “Risk Factors” in our

Annual Report on Form 10-K for the year ended December 31, 2022 and are incorporated herein by reference. Furthermore, Enstar undertakes no obligation to update any written or oral forward-looking statements or publicly

announce any updates or revisions to any of the forward-looking statements contained herein, to reflect any change in its expectations with regard thereto or any change in events, conditions, circumstances or assumptions

underlying such statements, except as required by law.

Annual CEO letterFrom Dominic Silvester, Chief Executive OfficerUNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

Commission File Number 001-33289

ENSTAR GROUP LIMITED
(Exact name of Registrant as specified in its charter)

BERMUDA
(State or other jurisdiction of incorporation or organization)

N/A
(I.R.S. Employer Identification No.)

Windsor Place, 3rd Floor, 22 Queen Street, Hamilton HM JX, Bermuda

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (441) 292-3645

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Ordinary shares, par value $1.00 per share
Depositary Shares, Each Representing a 1/1,000th Interest in a 7.00% ESGRP
Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Share,
Series D, Par Value $1.00 Per Share
Depositary Shares, Each Representing a 1/1,000th Interest in a 7.00% ESGRO
Perpetual Non-Cumulative Preferred Share, Series E, Par Value $1.00
Per Share

Trading Symbol(s) Name of Each Exchange on Which Registered
ESGR

The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
"emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates as of June 30, 2022 was $2.1 billion
based on the closing price of $213.98 per ordinary share on the NASDAQ Stock Market on that date. Shares held by officers and directors of the
registrant and their affiliated entities have been excluded from this computation. Such exclusion is not intended, nor shall it be deemed, to be an
admission that such persons are affiliates of the registrant.

As of February 27, 2023, the registrant had outstanding 15,999,691 voting ordinary shares and 1,597,712 non-voting convertible ordinary shares,
each par value $1.00 per share.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A
relating to its 2023 annual general meeting of shareholders are incorporated by reference in Part III of this Form 10-K

Enstar Group Limited

Annual Report on Form 10-K

For the Year Ended December 31, 2022

Table of Contents

Glossary of Key Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

PART I

Item 1.

Item 1A.

Item 1B.

Item 2.

Item 3.

Item 4.

PART II

Item 5.

Item 6.

Item 7.

Item 7A.

Item 8.

Item 9.

Item 9A.

Item 9B.

Item 9C.

PART III

Item 10.

Item 11.

Item 12.

Item 13.

Item 14.

PART IV

Item 15.

Item 16.

•

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Our Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 Strategic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

•

Our Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Human Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enterprise Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

•

Available Information About Enstar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . .
Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

•

Operational Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Results of Operations - for the Years Ended December 31, 2022, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . .

Key Performance Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

New Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Results of Operations by Segment - for the Years Ended December 31, 2022, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . .
Current Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Critical Accounting Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100

101

107

250

251

GLOSSARY OF KEY TERMS

Table of Contents

GLOSSARY OF DEFINED TERMS

A&E

Accident year

Acquisition costs

ADC

Adjusted BVPS

Adjusted RLE

Adjusted ROE

Adjusted TIR

AFS

Allianz

AmTrust

Annualized

AOCI

APRA

Arden

ASC

ASU

Atrium

BMA

BSCR

BVPS

Cavello

CISSA

Citco

CLO

CNA

Asbestos and environmental

The annual calendar accounting period in which loss events occurred, regardless of
when the losses are actually reported, recorded or paid.

Costs that are directly related to the successful efforts of acquiring new insurance
contracts or renewing existing insurance contracts, and which principally consist of
incremental costs such as: commissions, brokerage expenses, premium taxes and other
fees incurred at the time that a contract or policy is issued

Adverse development cover – A retrospective reinsurance arrangement that will insure
losses in excess of an established reserve and provide protection up to a contractually
agreed amount.

Adjusted book value per ordinary share - Non-GAAP financial measure calculated by
dividing Enstar ordinary shareholders’ equity, adjusted to add the proceeds from the
assumed exercise of warrants, by the number of ordinary shares outstanding, adjusted
for the exercise of warrants and equity awards granted and not yet vested. See “Non-
GAAP Financial Measures” in Item 7 for reconciliation.

Adjusted run-off liability earnings - Non-GAAP financial measure calculated by dividing
adjusted prior period development by average adjusted net loss reserves. See “Non-
GAAP Financial Measures” in Item 7 for reconciliation.

Adjusted return on equity - Non-GAAP financial measure calculated by dividing adjusted
operating income (loss) attributable to Enstar ordinary shareholders by adjusted opening
Enstar ordinary shareholders’ equity. See “Non-GAAP Financial Measures” in Item 7 for
reconciliation.

Adjusted total investment return - Non-GAAP financial measure calculated by dividing
adjusted total investment return by average adjusted total investable assets. See “Non-
GAAP Financial Measures” in Item 7 for reconciliation.

Available-for-sale

Allianz SE, former joint venture partner in Enhanzed Re

AmTrust Financial Services, Inc.

Calculation of the quarterly result or year-to-date result multiplied by four and then
divided by the number of quarters elapsed within the applicable year-to-date period.

Accumulated other comprehensive income (loss)

Australian Prudential Regulation Authority

Arden Reinsurance Company Ltd.

Accounting Standards Codification

Accounting Standards Update

Atrium Underwriting Group Limited and its subsidiaries

Bermuda Monetary Authority

Bermuda Solvency Capital Requirement

Book value per ordinary share - GAAP financial measure calculated by dividing Enstar
ordinary shareholders’ equity by the number of ordinary shares outstanding.

Cavello Bay Reinsurance Limited

Commercial Insurer's Solvency Self-Assessment

Citco III Limited

Collateralized loan obligation

Continental Casualty Company

Commutation

An agreement that provides for the complete discharge of all obligations between the
parties under a particular reinsurance contract for an agreed upon up-front fee

Core Specialty

Core Specialty Insurance Holdings, Inc.

DAC

DCo

Deferred acquisition costs

DCo, LLC

Table of Contents

GLOSSARY OF DEFINED TERMS

Defendant A&E liabilities

DCA

Dowling Funds

EB Trust

ECR

EGL

EMAL

Enhanzed Re

Enstar

Enstar Finance

Exchange Transaction

FAL

FCA

Defendant asbestos and environmental liabilities - Non-insurance liabilities relating to
amounts for indemnity and defense costs for pending and future claims, as well as
amounts for environmental liabilities associated with our properties

Deferred charge asset - The amount by which estimated ultimate losses payable exceed
the premium consideration received at the inception of a retroactive reinsurance
agreement

Dowling Capital Partners I, L.P. and Capital City Partners LLC

The Enstar Group Limited Employee Benefit Trust

Enhanced capital requirement

Enstar Group Limited

Enstar Managing Agency Limited

Enhanzed Reinsurance Ltd.

Enstar Group Limited and its consolidated subsidiaries

Enstar Finance LLC

The exchange of a portion of our indirect interest in Northshore for all of the Trident V
Funds’ indirect interest in StarStone U.S.

Funds at Lloyd's - A deposit in the form of cash, securities, letters of credit or other
approved capital instrument that satisfies the capital requirement to support the Lloyd's
syndicate underwriting capacity

U.K. Financial Conduct Authority

Fixed Income assets

Short-term and fixed maturity investments classified as trading and AFS, funds held-
directly managed, cash and cash equivalents, including restricted cash and cash
equivalents, and funds held by reinsured companies

Fixed income securities

Short-term and fixed maturity investments classified as trading and AFS, and fixed
maturity investments included within funds held-directly managed

Funds held

Funds held by reinsured
companies

Funds held - directly
managed

Future policyholder benefits

The account created with premium due to the reinsurer pursuant to the reinsurance
agreement, the balance of which is credited with investment income and losses paid are
deducted

Funds held, as described above, where we receive a fixed crediting rate

Funds held, as described above, where we receive the actual underlying investment
portfolio return

The provision recorded on the balance sheet relating to life reinsurance contracts, which
are based on the present value of anticipated future cash flows and mortality rates

Gate or side-pocket

A gate is the ability to deny or delay a redemption request, whereas a side-pocket is a
designated account for which the investor loses its redemption rights.

Group

GSSA

Companies of Enstar Group Limited

Group Solvency Self-Assessment

Hillhouse Group

Hillhouse Capital Management, Ltd. and Hillhouse Capital Advisors, Ltd.

IBNR

Inigo

InRe Fund

Investable assets

JSOP

LAE

LDTI

Lloyd's

Incurred but not reported - In addition to unreported claims, may include provisions for
the possibility that reported claims may settle for amounts that differ from the established
case reserves as well as the potential for closed claims to re-open. These provisions are
shown net of reinsurance balances recoverable

Inigo Limited

InRe Fund, L.P.

The sum of total investments, cash and cash equivalents, restricted cash and cash
equivalents and funds held

Joint Share Ownership Program

Loss adjustment expenses

Long duration targeted improvements accounting standard (ASU 2018-12 - Targeted
improvement to the Accounting for Long-Duration Contracts)

This term may refer to either the society of individual and corporate underwriting
members that pool and spread risks as members of one or more syndicates, or the
Corporation of Lloyd’s, which regulates and provides support services to the Lloyd’s
market

Table of Contents

GLOSSARY OF DEFINED TERMS

Letters of credit

Loss Portfolio Transfer - Retroactive reinsurance transaction in which loss obligations
that are already incurred are ceded to a reinsurer, subject to any stipulated limits

Monument Insurance Group Limited

Morse TEC LLC

National Association of Insurance Commissioners

Net asset value

Noncontrolling interest

Material transactions, other than business acquisitions, which generally take the form of
reinsurance or direct business transfers

North Bay Holdings Limited

Northshore Holdings Limited

The substitution of a new contract in place of an old one.

Other comprehensive income

Outstanding loss reserves - Provisions for claims that have been reported and accrued
but are unpaid at the balance sheet date

Equities, other investments, equity method investments, and the remainder of funds
held-directly managed

Enstar Group Limited and not any of its consolidated subsidiaries
Similar to a commutation, for direct insurance contracts

Percentage points - Numerical difference between two percentages

Prior period development - Changes to loss estimates recognized in the current calendar
year that relate to loss reserves established in previous calendar years

U.K. Prudential Regulation Authority

LOC

LPT

Monument Re

Morse TEC

NAIC

NAV

NCI

New business

North Bay

Northshore

Novation

OCI

OLR

Other Investments

Parent Company

Policy buy-back

PPD

PRA

Private equity funds

Investments in limited partnerships and limited liability companies

PSU

Range of Outcomes

Performance share units

The range of gross loss and LAE reserves implied by the various methodologies used by
each of our (re)insurance subsidiaries

RBC

Risk-based capital

Reinsurance to close (RITC)

A business transaction to transfer estimated future liabilities attached to a given year of
account of a Lloyd's syndicate into a later year of account of either the same or different
Lloyd's syndicate in return for a premium

Reserves for losses and LAE Management's best estimate of the ultimate cost of settling losses as of the balance

sheet date. This includes OLR and IBNR

Retroactive reinsurance

Contracts that provide indemnification for losses and LAE with respect to past loss
events

RLE

RNCI

ROE

Run-off

Run-off liability earnings – GAAP-based financial measure calculated by dividing prior
period development by average net loss reserves

Redeemable noncontrolling interest

Return on equity - GAAP-based financial measure calculated by dividing net earnings
(loss) attributable to Enstar ordinary shareholders by opening Enstar ordinary
shareholders’ equity

A line of business that has been classified as discontinued by the insurer that initially
underwrote the given risk

Run-off portfolio

A group of insurance policies classified as run-off

SCR

SEC

SGL No. 1

SISE

SSHL

StarStone Group

Solvency Capital Requirement

U.S. Securities and Exchange Commission

SGL No. 1 Limited

StarStone Insurance SE

StarStone Specialty Holdings Limited
StarStone U.S. Holdings, Inc. and its subsidiaries and StarStone International

StarStone International

StarStone's non-U.S. operations

Table of Contents

GLOSSARY OF DEFINED TERMS

StarStone U.S.

Step Acquisition

StarStone U.S. Holdings, Inc. and its subsidiaries

The purchase of the entire equity interest of an affiliate of Hillhouse Capital Management
Ltd and Hillhouse Capital Advisors, Ltd. in Enhanzed Re

Stone Point

Stone Point Capital LLC

SUL

TIR

StarStone Underwriting Limited

Total investment return - GAAP financial measure calculated by dividing total investment
return recognized in earnings for the applicable period by average total investable assets

Trident V Funds

Trident V, L.P., Trident V Parallel Fund, L.P. and Trident V Professionals Fund, L.P.

TSA

Transition Services Agreement

2020 Repurchase Program

An ordinary share repurchase program adopted by our Board of Directors in March
2020, for the purpose of repurchasing a limited number of our ordinary shares, not to
exceed $150 million in aggregate. This plan was terminated in July 2021.

2021 Repurchase Program An ordinary share repurchase program adopted by our Board of Directors in November

2021, which was effective through November 30, 2022. Under this program, we were
able to repurchase a limited number of our ordinary shares, not to exceed $100 million in
aggregate. We fully utilized the plan as of April 2022.

2022 Repurchase Program

An ordinary share repurchase program adopted by our Board of Directors in May 2022,
for the purpose of repurchasing a limited number of our ordinary shares, not to exceed
$200 million in aggregate. The program is effective through May 5, 2023.

U.K. Regulator

U.S. GAAP

ULAE

The FCA together with the PRA

Accounting principles generally accepted in the United States of America

Unallocated loss adjustment expenses - Loss adjustment expenses relating to run-off
costs for the estimated payout of the run-off, such as internal claim management or
associated operational support costs

Unearned premium reserve

The unexpired portion of policy premiums that will be earned over the remaining term of
the insurance contract

VIE

Variable interest entity

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS

This annual report and the documents incorporated by reference herein contain statements that constitute "forward-
looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, with respect to our financial condition, results of operations, business strategies, operating
efficiencies, competitive positions, growth opportunities, plans and objectives of our management, as well as the
markets for our securities and the reinsurance sectors in general.

Statements that include words such as "estimate," "project," "plan," "intend," "expect," "anticipate," "believe,"
"would," "should," "could," "seek," "may" and similar statements of a future or forward-looking nature identify
forward-looking statements for purposes of the federal securities laws or otherwise.

All forward-looking statements are necessarily estimates or expectations, and not statements of historical fact,
reflecting the best judgment of our management and involve a number of risks and uncertainties that could cause
actual results to differ materially from those suggested by the forward-looking statements.

These forward looking statements should, therefore, be considered in light of various important risk factors,
including those set forth in this annual report and the documents incorporated by reference herein, which could
cause actual results to differ materially from those suggested by the forward-looking statements. These risk factors
include:

•

the adequacy of our loss reserves and the need to adjust such reserves as claims develop over time, including
due to the impact of emerging claim and coverage issues and disputes that could impact reserve adequacy;

risks relating to our acquisitions, including our ability to evaluate opportunities, successfully price acquisitions,
address operational challenges, support our planned growth and assimilate acquired portfolios and companies
into our internal control system in order to maintain effective internal controls, provide reliable financial reports
and prevent fraud;

increased competitive pressures, including increased competition in the market for acquisitions of run-off
business;

risks relating to our ability to obtain regulatory approvals, including the timing, terms and conditions of any such
approvals, and to satisfy other closing conditions in connection with our acquisition agreements, which could
affect our ability to complete acquisitions;

risks relating to the variability of statutory capital requirements and the risk that we may require additional
capital in the future, which may not be available or may be available only on unfavorable terms;

the risk that our reinsurance subsidiaries may not be able to provide the required collateral to ceding companies
pursuant to their reinsurance contracts, including through the use of letters of credit;

risks relating to the availability and collectability of our ceded reinsurance;

the ability of our subsidiaries to distribute funds to us and the resulting impact on our liquidity;

losses due to foreign currency exchange rate fluctuations;

risks relating to climate change and its potential impact on the returns from our run-off business and our
investments;

the risk that the value of our investment portfolios and the investment income that we receive from these
portfolios may decline materially as a result of market fluctuations and economic conditions, including those
related to interest rates, credit spreads and equity prices (including the risk that we may realize losses related to
declines in the value of our investments portfolios if we elect to, or are required to, sell investments with
unrealized losses);

risks relating to our ability to structure our investments in a manner that recognizes our liquidity needs;

risks relating to our strategic investments in alternative asset classes and joint ventures, which are illiquid and
may be volatile;

Table of Contents

•

risks relating to our ability to accurately value our investments, which requires methodologies, estimates and
assumptions that can be highly subjective, and the inaccuracy of which could adversely affect our financial
condition;

risks relating to the complex regulatory environment in which we operate, including that ongoing or future
industry regulatory developments will disrupt our business, affect the ability of our subsidiaries to operate in the
ordinary course or to make distributions to us, or mandate changes in industry practices in ways that increase
our costs, decrease our revenues or require us to alter aspects of the way we do business;

loss of key personnel;

operational risks, including cybersecurity events, external hazards, human failures or other difficulties with our
information technology systems that could disrupt our business or result in the loss of critical and confidential
information, increased costs;

tax, regulatory or legal restrictions or limitations applicable to us or the (re)insurance business generally;

changes in tax laws or regulations applicable to us or our subsidiaries, or the risk that we or one of our non-U.S.
subsidiaries become subject to significant, or significantly increased, income taxes in the United States or
elsewhere; and

risks relating to the ownership of our shares resulting from certain provisions of our bye-laws and our status as
a Bermuda company.

The risk factors listed above should not be construed as exhaustive and should be read in conjunction with the Risk
Factors that are included in Item 1A below. We undertake no obligation to publicly update or review any forward-
looking statement, whether to reflect any change in our expectations with regard thereto, or as a result of new
information, future developments or otherwise, except as required by law.

Table of Contents

PART I

ITEM 1. BUSINESS

Overview

Enstar Group Limited ("Enstar") is a leading global (re)insurance group that offers capital release solutions through
our network of group companies. We seek to create value by managing (re)insurance companies and portfolios of
(re)insurance and other liability business in run-off and striving to generate an attractive risk-adjusted return from
our investment portfolio. In this report, the terms "Enstar," the “Company," "us," and "we" are used interchangeably
to describe Enstar and our subsidiary companies.

We acquire legacy liabilities and (re)insurance reserves from companies and provide retroactive reinsurance
coverage for portfolios of (re)insurance business, primarily via loss portfolio transfer contracts (“LPTs”). Additionally,
we provide reinsurance contracts to other (re)insurers to mitigate some of their risk of future adverse development
(an adverse development cover, or “ADC”) on insurance risks relating to prior accident years.

A run-off portfolio is a group of insurance policies generally described by the accident year, line of business and
jurisdiction that an insurer that initially underwrote the risks seeks to exit, or put into run-off. The facts and
circumstances underlying an insurer’s or company's (seller's) decision to put a portfolio into run-off or seek ADC
contracts varies. Usually, the portfolios of risks have become inconsistent with the seller’s core competencies,
provide unwanted exposure to a particular risk or segment of the market and/or absorb capital that the seller may
wish to deploy elsewhere. These portfolios of risks are often associated with potentially large exposures and lengthy
time periods before resolution of the last remaining insured claims, resulting in uncertainty to the (re)insurer
covering those risks. An owner of a company with direct exposure to asbestos and environmental liabilities may
wish to dispose of their exposure to such liabilities for similar reasons.

We seek to obtain claims resolutions and settlements on the actual and potentially valid claims within each portfolio
quickly, where feasible, to avoid lengthy and continuing defense costs. If we are successful at settling claims or
otherwise manage the expected value of the losses for less than our carried reserves, we recognize favorable prior
period development within our net incurred loss and loss adjustment expenses. Similarly, we may experience
adverse development on the carried reserves if the projected costs of claims exceeds our estimates. We include the
net development as a component of our performance, or run-off liability earnings (“RLE”).

Our claims handling responsibilities and authorities can vary from contract to contract. Generally, we seek to obtain
direct claims management authority over our LPT’s and passive claims monitoring, oversight and influence over our
ADC portfolios, where our counterparty would typically benefit from our experience with managing similar claims.
We may also seek to commute acquired reinsurance contracts and buy back underlying insurance policies, where
appropriate.

We receive premium for our retroactive reinsurance solutions and invest these funds to generate investment
earnings. We negotiate the investment class, fixed income duration and minimum asset quality needed for each
portfolio with the ceding company as these investments are typically pledged as collateral within the reinsurance
contract. For our remaining investments we decide within our investment allocation strategy the asset types, risk,
liquidity and expected returns.

The substantial majority of our acquisitions have been in the run-off business, which generally includes property and
casualty, workers’ compensation, asbestos and environmental (“A&E”), professional indemnity, directors and
officers, construction defect, motor, marine, aviation and transit, and other closed and discontinued blocks of
business.

115
Transactions
Completed Since
2000

$35.1 billion*
Total Liabilities
Acquired Since 2000

9%1 & 10%2
Increase in Book Value
Per Ordinary Share

10%1 & 10%2
Return on Equity

1 Three year average (2020 - 2022)
2 Five year average (2018 - 2022)
*Total liabilities acquired includes gross loss reserves and defendant A&E liabilities.

Enstar Group Limited | 2022 Form 10-K

Table of Contents

ITEM 1 | Business | Strategy

Our Strategy

Leverage Management’s Extensive Experience and Industry Relationships

We leverage our senior managements’ skills and experience to solidify our position as a leading run-off acquirer
with a demonstrated ability to identify and execute growth opportunities.

Engage in Disciplined Acquisition Practices

When assessing potential acquisition targets, we carefully analyze risk exposures, claims practices, reserves and
our return requirements as part of our detailed due diligence process. We value opportunities that include risk
exposures and other characteristics that we have had prior experience managing.

Manage Claims and Re(insurance) Contracts Professionally, Expeditiously, and Cost-
Effectively

We aim to generate RLE by drawing on in-house expertise and trusted third-party relationships to dispose of claims
efficiently, paying valid claims on a timely basis, and relying on policy terms and exclusions where applicable, and
litigation when necessary, to defend against paying invalid claims.

Using detailed claims analysis and actuarial projections, we seek to negotiate with policyholders and reinsurers with
a goal of settling existing (re)insurance liabilities and monetizing (re)insurance assets in a cost efficient manner.

Prudently Manage Investments and Capital

We strive to achieve attractive risk-adjusted returns, while growing profitability and generating long-term growth in
shareholder value.
2022 Strategic Developments

Substantially Unwound Enhanzed Re’s Reinsurance Transactions

•

In August 2022, Enhanzed Reinsurance Ltd. (“Enhanzed Re”) entered into a Master Agreement with Cavello
Bay Reinsurance Limited (“Cavello”), a wholly-owned subsidiary of Enstar, and Allianz SE (“Allianz”). Pursuant
to the Master Agreement, Enhanzed Re, Cavello and Allianz agreed to a series of transactions that allowed us
to unwind the Enhanzed Re reinsurance transactions in an orderly manner.

The transactions included (i) commuting or novating all of the reinsurance contracts written by Enhanzed Re, (ii)
repaying the $70 million, in aggregate principle, of subordinated notes issued by Enhanzed Re to an affiliate of
Allianz, and (iii) distributing Enhanzed Re’s excess capital to Cavello and Allianz in accordance with their
respective equity ownership in Enhanzed Re.

As of December 31, 2022, all of the transactions were complete, and the impact of transactions completed in
the third quarter of 2022 (primarily the commutation of the catastrophe reinsurance with Allianz) have been
recorded in our 2022 results, while the impact of transactions completed in the fourth quarter of 2022 (primarily
the novation of reinsurance of closed block life annuity policies with Monument) will be reflected in our first
quarter 2023 results, as we report the results of Enhanzed Re on a one quarter lag.

• Given our rationalization of the Enhanzed Re reinsurance business, we renamed our Enhanzed Re segment as
the Assumed Life segment during the third quarter of 2022. We may leverage this segment for any future
potential assumed life business transactions if and when they occur.

Enstar Group Limited | 2022 Form 10-K

Table of Contents

ITEM 1 | Business | Our Business

Our Business

We acquire run-off and other (re)insurance reserves using retroactive reinsurance contracts where we are paid
premium consideration to reinsure, up to a specified limit, underlying policies issued by other insurers who have
written these risks in prior accident years. On closing a transaction, the premium we receive is not recognized as
income, nor are the liabilities we acquire recognized as net incurred losses. These items are recorded to the
balance sheet with any subsequent changes to the value of ultimate losses and liabilities recorded in the
consolidated statements of earnings.

In addition, any difference between premium and losses recognized upon initial recognition of a transaction, is
recorded as a deferred charge asset (“DCA”) or deferred gain liability (“DGL”) which is subsequently amortized.1

We acquire (re)insurance companies and legacy manufacturing companies with direct exposure to asbestos and
environmental liabilities (“defendant A&E liabilities”), which are either in run-off or can be placed into run-off
following our acquisition. We receive investment returns from the investment of the assets acquired with these
companies that we use to settle the liabilities acquired, which may take many years to complete.

We establish our best estimate of the liabilities we assume based upon actuarial analyses of the claims data
provided to us by the counterparties, our review of claims files and reinsurance assets, our analysis of claim trends
and other data supplied as part of our due diligence.

Accordingly, at the time we enter the arrangements, we do not reflect the potential impact of our claims
management strategies as we have no assurance that our efforts will be successful nor how any development may
emerge. Similarly, we do not recognize reductions for any potential settlements or commutations that we have not
executed as we do not solely control any such outcome.

We strive to generate attractive investment returns and favorable prior period development from our active claims
management and/or claims management influence, via our involvement in and oversight rights over the loss
portfolios. Our favorable or adverse outcomes are recorded as prior period development (“PPD”) within net incurred
losses and loss adjustment expenses (“LAE”). We record changes to the value of our defendant A&E liabilities
within other income.

As a result, the traditional (re)insurance underwriting ratios (loss ratios and combined ratios) are not relevant to us.
Net earned premiums are not a significant source of revenue and current period net incurred losses and LAE from
those premiums are not a significant source of losses for our Run-off segment. Our ability to generate favorable
RLE or avoid unfavorable RLE from our management of acquired portfolios can vary. RLE may be recognized
shortly after acquisition of the new portfolio, or may not appear for many years, if at all.

1 This is further described in Note 2 to our consolidated financial statements.

Enstar Group Limited | 2022 Form 10-K

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ITEM 1 | Business | Our Business

1 Acquire New Business

Sourcing

We leverage our industry relationships and our position as an experienced run-off specialist, together with our
footprint in the major (re)insurance hubs, to source new business opportunities. We engage directly with companies
and/or their representative brokers to bid for and negotiate new transactions.

Solutions

Our Run-off business offers a variety of capital release solutions, including but not limited to:

LPTs: We offer LPTs in situations where our clients wish to divest
themselves of a portfolio of insurance business. In such instances, we
are able to retroactively reinsure against deterioration of the portfolio of
loss reserves, subject to any stipulated limits. In the Lloyd's market, we
to close (“RITC”)
provide similar solutions
transactions.

through reinsurance

ADCs: In situations where our clients are concerned about loss
deterioration on selected books of business, we offer ADCs whereby we
reinsure certain losses in excess of our clients’ established reserves, up
to a pre-determined limit.

Acquisitions: Where our clients or potential clients want to dispose of
a company in run-off, we may purchase the company. Such a
transaction is beneficial to the seller because it enables them to
monetize their investment in that company.

Pricing

We evaluate each opportunity presented by carefully reviewing and analyzing the portfolio’s risk exposures, claim
practices, capital and reserve requirements and outstanding claims. This initial analysis allows us to determine
whether the opportunity aligns with our strategy and targeted return thresholds.

If we decide to pursue an opportunity, we price it based on certain assumptions, including: our ability to apply our
core competencies to negotiate with (re)insureds, resolve valid claims, manage the investments associated with the
portfolio and otherwise manage the nature of the risks posed by the business or portfolio.

LPTs and ADCs: Using actuarial analysis and our view of the exposure assumed, we determine the premium
consideration that we charge the ceding companies under retroactive reinsurance contracts.

This premium is generally lower than the undiscounted estimated ultimate losses payable at inception due to the
time value of money, in recognition that we will earn an investment return on the assets which support the payment
of insurance claims in the future.

Acquisitions: In order to price the acquisition of a company in run-off, we estimate the fair value of assets and
liabilities acquired based on actuarial analyses and our views of the exposures assumed.

The fair value of the company may be lower than its book value based upon the risks assumed, the time value of
money as applied to its liabilities and to our client no longer having to manage the company.

Enstar Group Limited | 2022 Form 10-K

Loss Reserves, net (of Reinsurance)(in billions of U.S dollars) $12.0 $11.6 $9.9 $8.7 $2.1 $2.9LPTs and otherADCs20222021

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ITEM 1 | Business | Our Business

2 Manage Liabilities

Non-Life Run-off

There is a period over which the reserve liabilities associated with LPTs, ADCs, acquisitions and other similar
transactions are extinguished, as described below:

•

At take-on: upon integrating the acquired company or portfolio we record our best estimate of the value of loss
reserves. We then implement our plan to manage the book and its exposures that we gathered during the
course of the acquisition process.

Subsequent to take-on: in the proceeding years, we develop a deeper understanding of the claims portfolio from
a reserving perspective and employ our claims management strategies in order to generate RLE.

After applying our claims management strategies for a period of time, there are generally reduced opportunities
remaining to achieve RLE. At that point, our goal is to continue to manage costs and generate investment returns as
we run off the remaining reserves in an orderly manner.

Both the A&E losses and LAE and defendant A&E liabilities have much longer expected claims settlement periods
than our general casualty books of business, and therefore the period over which their reserve liabilities are
extinguished tends to be significantly longer than other lines of business.

The strategies we employ to manage our acquired companies and portfolios of business in run-off include:

Claims Management: Integral to our success is our ability to analyze, administer, and settle claims while managing
related expenses. We work with seasoned and well-trained claims professionals, along with claims reporting and
control procedures, in all of our claims units. Our claims management processes also include leveraging our
extensive relationships and developed protocols to manage outside counsel and other third parties more efficiently
to reduce expenses.

For certain lines of business, we have entered into agreements with third-party administrators to manage and pay
claims on our subsidiaries’ behalf and advise with respect to case reserves. These agreements generally set forth
the duties of the third-party administrators, limits of authority, indemnification language designed for our protection
and various procedures relating to compliance with laws and regulations. The agreements clearly define our claims
handling guidelines, and we provide active oversight and monitoring to manage these administrators on an ongoing
basis in order to ensure the third-party administrators are operating in accordance with our expectations.

Commutations and Policy Buybacks: Where possible, we negotiate with third-party (re)insureds to commute their
(re)insurance agreement (sometimes called policy buybacks for direct insurance) for an agreed upon up-front
payment by us.

Commutations and policy buybacks provide us with an opportunity to exit exposures to certain policies and
(re)insureds generally at a discount to the ultimate liability. Commutations can reduce the duration, administrative
burden and ultimately the future cost we face as we manage the run-off of the claims and the amount of regulatory
capital we are required to maintain.

In certain lines of business and jurisdictions, such as direct workers’ compensation insurance, commutations and
policy buyback opportunities are not typically available, and our strategy with respect to these businesses is to
derive value through efficient and effective claims management.

Reinsurance Recoverables: We manage reinsurance recoverables by working with reinsurers, brokers and
professional advisors to achieve fair and prompt payment of reinsured claims, and we take appropriate legal action
to secure recoverables when necessary. Where appropriate we negotiate commutations with our reinsurers by
securing a lump sum settlement in complete satisfaction of the reinsurer’s past, present and future liability in respect
of such claims.

Enstar Group Limited | 2022 Form 10-K

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ITEM 1 | Business | Our Business

Life Run-off

Our subsidiary Enhanzed Re, is a Bermuda-based Class 4 and Class E reinsurer, which, prior to the November
2022 novation to Monument Re, reinsured a closed block of life annuity policies from Allianz SE (“Allianz”), who
retained direct claims management and operational responsibilities.

We may leverage this segment for any future potential assumed life business transactions if and when they occur,
and our objective for this business is to reinsure products that focus on longevity and investment risks.

We seek to deliver returns by taking advantage of the relative diversification benefits on our composite capital
structure and the capital adjusted return profile of this business relative to our current run-off business.

Seasonality

We complete most of our loss reserve studies in the fourth quarter of each year and, as a result, we tend to record
the largest movements, both favorable or adverse, to net incurred losses and LAE in these periods. However, we
also monitor the progression of claims and claims settlements in the earlier interim periods and may adjust our
reserves if, and when, we deem it appropriate.

3 Manage Investments

We manage our investments to obtain attractive risk adjusted returns while maintaining prudent diversification of
assets and operating within the constraints of a regulated global (re)insurance group. We also consider the liquidity
requirements and duration of our claims and contract liabilities.

We have a group-wide investment policy and group mandate, which applies to our consolidated investment portfolio
and all subsidiary cash and investment portfolios.

Our investment policy:

• Outlines our investment objectives and constraints;

•

Prescribes permitted asset class limits and strategies;

Establishes risk tolerance limits; and

Establishes appropriate governance.

Our investment policy also includes constraints that impact our asset allocation and external asset manager
selection.

In pursuing our investment objectives, we typically allocate to asset classes with varying risk-return profiles that fall
into two classifications: core assets and non-core assets.

Enstar Group Limited | 2022 Form 10-K

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ITEM 1 | Business | Our Business

investment portfolio

is
Core Asset Strategy: Our core assets
predominantly invested in investment grade fixed income securities that
are duration and currency optimized and matched against the expected
payment of loss reserves in accordance with our contractual obligations
with our counterparty insurers and as prescribed in statutory liquidity
and solvency regulations. Our goal with these securities is to meet the
expected maturity to support prompt payment of the claims, whilst
maximizing investment income.

Our fixed income assets include U.S. government and agency
investments, highly rated sovereign and supranational investments,
high-grade corporate investments as well as mortgage-backed and
asset-backed investments.

Non-Core Asset Strategy: Our goal with our non-core assets investment
portfolio is to provide diversification and increased return. Our non-core
assets typically include below-investment grade fixed income securities
and bank loans, public equity securities, hedge funds, private equity
funds, fixed income funds, collateralized loan obligation (“CLO”)
equities, real estate funds, private credit funds and equity method
investments.

Our core assets, or fixed income assets, include short-term and fixed maturity investments classified as trading and
available-for-sale (“AFS”), funds-held directly managed, cash and cash equivalents, and funds held by reinsured
companies.

Our non-core assets, or other investments, include equities and equity method investments.

The allocation and composition of our non-core assets may vary, depending on risk appetite, current market
conditions and the assessment of relative value between asset classes.

We believe our non-core investments provide diversification in our overall investment portfolio, because historically
and generally they have low correlation with our fixed income assets, thereby providing an opportunity for improved
risk-adjusted rates of return while minimizing downside risk over the long term. The returns of our non-core
investments may be volatile, and we may experience significant unrealized gains or losses in a particular quarter or
year. Regulatory, rating agency, our internal risk appetite and other factors may limit our capacity to hold non-core
assets.

Portfolio Allocation: Our portfolio is diversified across several core and non-core asset classes and targets
attractive risk adjusted returns, while taking into account regulatory, capital, risk, and other relevant considerations.
We periodically review the performance of the portfolio and reallocate assets to take advantage of opportunities in
the market. This asset rebalancing is periodically reviewed by our Board Investment Committee.

Asset Manager Selection: Our investment portfolio is managed by external managers through the execution of
investment management agreements and investment guidelines. We hold regular discussions with our managers to
monitor investment performance.

Performance and Compliance Monitoring: Our investment management agreements and guidelines with external
asset managers include performance benchmarks. The benchmarks take various factors into consideration,
including duration, currency, asset class, geography, sector, credit quality and other relevant metrics that impact
performance.

An investment compliance report for the aggregate investment policy is prepared for our Board Investment
Committee on a quarterly basis in arrears. The Board Investment Committee and our subsidiary boards are
responsible for ensuring that investment compliance guidelines proposed are aligned to our stated risk appetite.

Enstar Group Limited | 2022 Form 10-K

Investable Assets(in billions of U.S. dollars)$19.5$21.7$14.6$16.7$4.9$5.0Fixed income assetsOther investments20222021

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ITEM 1 | Business | Our Business

4 Redeploy Capital

Our regulated subsidiaries and group are subject to capital requirements, which require us to hold additional assets
to mitigate the risk of insufficient funds to fulfill our insurance obligations in adverse economic or operational
circumstances. Amounts beyond our internal capital levels are available for us to redeploy.

As we settle our liabilities, we reduce our required capital and any excess capital may be redeployed into the
business for further acquisitions. We believe that the best investment is in our business, by funding future
transactions and meeting our financing obligations. In addition, we may choose to add value by returning funds to
shareholders in the form of share repurchases or dividends. To date, we have not declared any dividends on our
ordinary shares.
Competition

Our Run-off segment competes in the global insurance market with domestic and international reinsurance
companies to acquire and manage (re)insurance companies in run-off and portfolios of (re)insurance business in
run-off. The Run-off space has seen several new entrants to the market over the recent years which has increased
competition in the overall market.

We compete with different companies depending upon the size of the portfolio losses being contemplated and the
location of the insurer or insurance risks.

The acquisition and management of companies and portfolios in run-off is highly competitive, and driven by several
factors, including proposed acquisition price, operational reputation, and financial resources including new capital
and alternative forms of capital entering the markets.

We have established long-term and continuing business relationships throughout the (re)insurance industry, which
can be a significant competitive advantage for us. Additionally, we believe that we are competitive on price and have
a reputational ability to complete and manage transactions.

Enstar Group Limited | 2022 Form 10-K

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ITEM 1 | Business | Competition

Our Organization

Segments2

We report the results of our operations through four reportable segments:

•

Run-off: consists of our acquired property and casualty and other (re)insurance business.

Assumed Life: consists of life and catastrophe business that we assumed via the acquisition of the controlling
interest in Enhanzed Reinsurance, Ltd. (“Enhanzed Re”).

Investments: consists of our investment activities and the performance of our investment portfolio, excluding
those investable assets attributable to our Legacy Underwriting segment.

Legacy Underwriting: consists of businesses that we have exited via the sale of the majority of our interest.

In addition, our corporate and other activities, which do not qualify as an operating segment, include income and
expense items that are not directly attributable to our reportable segments.

Major Operating Subsidiaries

Our (re)insurance business is regulated and requires licenses to operate in each relevant jurisdiction. Our major
operating insurance subsidiaries and their regulatory domiciles are listed below:

Regulated Company

Clarendon National Insurance Company

Fletcher Reinsurance Company

Yosemite Insurance Company

Cavello Bay Reinsurance Limited

Fitzwilliam Insurance Limited

StarStone Insurance Bermuda Limited

SGL No.1 Limited

Mercantile Indemnity Company Limited

River Thames Insurance Company Limited

Gordian Runoff Limited

StarStone Insurance SE

Jurisdiction

% of Net Loss Reserves
as of December 31, 2022

United States

Bermuda

82%

United Kingdom

11%

Other

—%

100%

2 For further information on our reportable segments, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results

of Operations – Results of Operations by Segment” and Note 3 to our consolidated financial statements.

Enstar Group Limited | 2022 Form 10-K

ITEM 1 | Business | Human Capital Resources

Table of Contents

Human Capital Resources

As of December 31, 2022, we had 792 employees, as compared to 832 employees as of December 31, 2021.

We seek to attract, retain and develop a diverse and specialized workforce that supports our culture, target
operating model and business performance. We do this by applying the following strategies:

• Making use of a range of hiring channels and approaches and incorporating a total reward offering that includes
market competitive salaries, an annual bonus plan as well as comprehensive benefits to protect employee
health, wellness and financial security.

•

Promoting alignment of interests with investors through the use of an employee share purchase plan and long-
term equity-based incentives.

Encouraging our employees to periodically review development areas with their managers to identify
appropriate learning opportunities to better equip our work force with the skills necessary for near- and long-
term success. We offer an array of professional development programs and initiatives to support our employees'
career aspirations and enhance our leadership and management capabilities—creating a pipeline of talent able
to deliver on our long-term strategic objectives and developing a skilled workforce with succession capabilities.
For example, we provide all of our employees access to a digital platform containing learning resources
designed to support their role and career.

In addition, strengthening our succession planning is a key priority for us across all levels. We have made a
significant investment in establishing and developing programs for managers, functional heads and group
executives designed to enhance leadership and management capabilities across our senior management team. For
example, in 2022 we established our Group Executive Leadership Program, which is designed to support
individuals at the executive level. We also offer programs to regional executives and other potential successors
throughout the organization.

Diversity, Equity and Inclusion

We also understand the importance of diversity in our work force and our diversity, equity and inclusion (“DE&I”)
vision is to create a diverse and inclusive workplace, where everyone feels that they belong and where diversity is
celebrated. Over the past year we increased our focus on DE&I, which included:

•

Creating a global DE&I steering and action group, chaired by our Chief Risk Officer and comprising senior
stakeholders from around the business, which is responsible for agreeing the DE&I strategy and periodically
monitoring progress.

Enhancing our ‘Employee Value Proposition’ by designing and launching our external ‘Enstar Careers’ website,
which allows us to clearly articulate the nature of both our business and our working environment.

Launching a summer internship program, hosted by offices in the U.S., the U.K. and Bermuda, and welcoming a
diverse group of individuals to undertake a mix of industry training, departmental experience and personal
development activities.

To measure our progress, we use a variety of human capital measures in managing our business, including
workforce demographics and diversity metrics, attrition and retention metrics and hiring metrics. We continue to
build and expand on the range of metrics we produce as we continue to work towards our DE&I vision.

Enstar Group Limited | 2022 Form 10-K

As of December 31, 2022, our gender metrics on a global scale were as follows:

ITEM 1 | Business | Human Capital Resources

Table of Contents

We are committed to fostering a culture that treats all employees fairly and with respect, promotes inclusivity and
diversity, and provides equal opportunities for professional development and merit-based advancement. We adhere
to these values by following a Board Diversity Policy and Group Diversity, Equity and Inclusion Policy. We intend to
continue conducting human capital management activities, including recruitment, career development and
advancement, role design and compensation in a manner reflective of our commitment to diversity and inclusion.

Employee Wellbeing

We also recognize the importance of our employees as individuals and the role we can play in promoting their
wellbeing. Our wellbeing strategy is now well defined across three pillars of core focus, which includes:

•

Emotional and social: we offer an Employee Assistance Program, which provides a professional and
confidential service that covers a broad range of topics, both personal and work-related.

Physical: our benefits coverage includes a range of centrally provided and individually tailored health-related
insurance packages, alongside a number of additional benefits and initiatives. For example, we provide access
to a wellbeing platform that offers a range of benefits and tools and hosts Enstar’s health initiatives and
challenges, such as our Global Step Challenge held in June 2022. We also offer an Enstar Wellness allowance,
enabling an annual reimbursement of expenses that support mental or physical wellness, and various other
provisions such as annual health assessments and virtual medical consultation programs.

Financial: we run a number of activities to support the financial wellbeing of our people, which includes offering
access to financial advisors, benefit webinars and other financial assistance facilities.

Our employee engagement, diversity and inclusion results are a clear indication of both our efforts and successes in
managing and supporting our employees. For the past two years our rating index has been in the upper quartile of
the financial services benchmark resulting in Enstar being awarded the People Insight ‘Outstanding Place to Work
2022’ award, which less than 10% of participants receive.

Enstar Group Limited | 2022 Form 10-K

Enstar Global Workforce by Gender46%54%MenWomenEnstar Global Employee Seniority by Gender80.5%59.2%48.2%34.1%19.5%40.8%51.8%65.9%MenWomenExecutiveSenior ManagementMiddle ManagementAll Other Staff

ITEM 1 | Business | Enterprise Risk Management

Table of Contents

Enterprise Risk Management

Effective enterprise risk management (“ERM”) and oversight is a top priority for our management and Boards of
Directors (both at the parent company and subsidiary levels). We aim to ensure that we have engaged in highly
comprehensive risk management framework to identify, measure, manage, monitor and report on risks that affect
the achievement of our strategic, operational and financial objectives.

We believe that an effective ERM framework is crucial to maintaining the strength of Enstar and our (re)insurance
companies (our "Group") and enhancing our operations. These include our business strategy and objectives, capital
management decision making, operations and processes, financial performance and financial reporting, regulatory
compliance, reputation with key stakeholders and business continuity planning. Through our ERM framework, we
aim to embed considerations of risk through all aspects of our business.
Risk Management Strategy

The Group’s Risk Management Strategy has been designed to help meet our core objectives, which is to:

•

engage in highly disciplined and risk based, acquisition, management and (re)insurance practices across a
diverse portfolio of loss reserves;

seek investment risk where it is adequately rewarded;

• maintain loss reserving risk in line with risk appetite;

• minimize capital, liquidity, credit, operational and regulatory risks; and

•

promote the consideration of Environmental (specifically, climate change effects), Social and Governance
(“ESG”) risks in the strategies, business planning and other operational processes.

These strategies are pursued through the use of appropriate controls, governance structures and highly skilled
teams effectively working together.

Our risk management strategy is embedded across the organization by promoting a strong culture of risk
awareness. This is evidenced through our day-to-day approach to managing our business. In particular, risk matters
are regularly discussed at management and Board meetings, providing challenge and considering opportunities
against risks being assessed and managed.

The goal of our risk management strategy is to enable the proactive, pragmatic management of risks arising in day-
to-day operations, primarily through the implementation and maintenance of an effective ERM framework to ensure
a robust control environment.
Risk Appetite

The Risk Appetite Framework in place at both the Group and its regulated subsidiaries monitors risk taking
throughout the business by linking business strategy and planning with available capital and risk. It is designed to
consider material risks, protect the Group and its subsidiaries from unacceptable levels of loss, compliance failures
and/or adverse reputational impacts and support the wider strategic decision-making process.

A qualitative risk appetite statement is set for each material risk to represent the amount of risk the Board is willing
to accept, which is supported by quantitative tolerances (such as minimum capital required). The qualitative risk
appetite statements and supporting quantitative tolerances are reviewed and approved by the Board annually.
Subsidiary companies’ risk appetite and tolerances are reviewed against their specific risk profiles and strategy and
approved by the local Board(s), and are reviewed annually to ensure that subsidiary risk appetite does not in the
aggregate exceed the aggregate Group Risk Appetite Framework.

Accountability for the implementation, monitoring and oversight of our risk appetite is aligned with individual
corporate executives and monitored and maintained by the Risk Management function. Risk tolerance levels are
monitored and deviations from pre-established levels are reported in order to facilitate responsive action. On a
quarterly basis, risk tolerances are reported by the assigned first line business owner to Risk Management who
collate, review and provide challenge and aggregate tolerances. Individual tolerances are rated ‘Red’, ‘Amber’ or
‘Green’ relative to pre-defined thresholds. As determined by the Board or Risk Committee, the Risk Appetite

Enstar Group Limited | 2022 Form 10-K

ITEM 1 | Business | Enterprise Risk Management

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Framework and tolerance(s) may be reviewed/updated outside of the annual review cycle in the event of a material
change in risk profile.
Risk Governance and Culture

The Board of Directors actively oversees the management of risks to which the Group is exposed in a variety of
ways. To ensure comprehensive oversight, the Company has an EGL Risk Committee, as well as Group and
jurisdictional Management Risk Committees comprised of executive and/or senior management responsible for the
management of key risks. These committees are supported by representatives from our Risk & Compliance and
Internal Audit functions as appropriate.

The Group, supported by the wider ERM Framework, promotes a strong risk culture through a rigorous hiring
process for employees, performing an annual Compensation Risk Assessment, ensuring employee understanding
and compliance with the Employee Code of Conduct, and by promoting employee risk awareness of compliance
and IT security matters through training.
Risk Ownership, Accountability and Assurance

We maintain the traditional Three Lines Model (Management, Risk & Compliance and Internal Audit) to delineate
accountabilities and establish a ‘check and balance’ management of risks across the Group. The Three Lines Model
has been selected to allow for clear ownership and accountability of risks, and independent assurance that these
have been considered appropriately via our Internal Audit function. This model also allows for a clear assignment of
risk management responsibilities across all Group activities and helps communicate the approach to risk
management throughout the organization.

The Risk Management function, headed by the Group Chief Risk Officer (“CRO”), is responsible for both designing
and operationalizing the various components of the ERM Framework throughout the Group. To ensure
independence, the CRO reports to our CEO and has direct access to the Chairperson of the EGL Risk Committee.
Our CRO obtains expertise from other functions / subject matter experts, as appropriate, to provide coverage over
key risk areas.

The Group and its subsidiaries have internal controls in place, designed to manage risks to acceptable levels and
the effectiveness of controls is regularly considered in managing and balancing risk and appetite. These are
implemented within each line of defense.

Entity Level Management

At the operating subsidiary level, risks relating to our individual (re)insurance subsidiaries are also overseen by the
subsidiary boards of directors, risk committees and other committees, and management teams, consistent with
applicable regulatory requirements and our overall ERM framework that is embedded at local levels and throughout
the business.
Emerging Risks

As part of our ERM Framework, we maintain an Emerging Risk Framework, which sets out the minimum standards
by which emerging risks are identified, analyzed, evaluated, treated and reported on. Pursuant to this framework,
the Management Risk Committees and our Group Risk Committee continually monitor emerging risks and oversee
changes to our ERM Framework to react to these risks, where appropriate. Emerging risks are defined as "risks
which may develop or which already exist but are difficult to quantify." They are marked by a high degree of
uncertainty, and may or may not fall within the categories outlined above under "Risk Categories." While emerging
risks are not fully understood or explicitly considered within the day-to-day operation of our business due to the lack
of quantifiable data, we expect that the potential impacts of these risks may crystallize over time and therefore merit
additional analysis, monitoring, evaluation and, when appropriate, management of the emerging risk. See "Item 1A.
Risk Factors" for further detail on these risks.

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ITEM 1 | Business | Regulation

Regulation

Overview

The business of (re)insurance is regulated in most countries, although the degree and type of regulation varies from
one jurisdiction to another. Our material operations are in Bermuda, the United Kingdom, the United States,
Australia and several Continental European countries. We are subject to extensive regulation under the applicable
statutes in these countries and any others in which we operate. In addition, the Bermuda Monetary Authority
(“BMA”) acts as group supervisor of our Group.

We may become subject in the future to regulation in new jurisdictions or additional regulations in existing
jurisdictions depending on the location and nature of any companies acquired and the volume and location of
business being transacted by our existing companies.
Group Supervision

The BMA’s group supervision objective is to provide a coordinated approach to the regulation of an insurance group
and its supervisory and capital requirements. Bermuda has been recognized by the U.S. National Association of
Insurance Commissioners (“NAIC”) as a qualified jurisdiction, and the E.U. recognizes Bermuda's full equivalence
under Solvency II.

As our Group supervisor, the BMA performs a number of functions including: (i) coordinating the gathering and
dissemination of information for other regulatory authorities; (ii) carrying out a supervisory review and assessment of
our Group; (iii) carrying out an assessment of our Group's compliance with the rules on solvency, risk concentration,
intra-group transactions and appropriate governance procedures; (iv) planning and coordinating, through regular
meetings with other authorities, supervisory activities in respect of our Group; (v) coordinating any enforcement
action that may need to be taken against our Group or any Group members; and (vi) coordinating meetings of
colleges of supervisors in order to facilitate the carrying out of these functions. Cavello Bay Reinsurance Limited
(“Cavello”) serves as our Group’s Designated Insurer. As Designated Insurer, Cavello is required to facilitate
compliance by our Group with the insurance solvency and supervision rules.

On an annual basis, the Group is required to file Group statutory financial statements, a Group statutory financial
return, a Group capital and solvency return, audited Group financial statements, a Group Solvency Self-Assessment
(“GSSA”), and a financial condition report with the BMA. The GSSA is designed to document our perspective on the
capital resources necessary to achieve our business strategies and remain solvent, and to provide the BMA with
insights on our risk management, governance procedures and documentation. In addition, the Group is required to
file a quarterly financial return with the BMA.

We are required to maintain available Group statutory capital and surplus in an amount that is at least equal to the
group enhanced capital requirement (“ECR”). The BMA has also established a group target capital level equal to
120% of the Group ECR.

The BMA also maintains supervision over the controllers of all Bermuda registered insurers, and accordingly, any
person who, directly or indirectly, becomes a holder of at least 10% of our ordinary shares must notify the BMA in
writing within 45 days of becoming such a holder (or ceasing to be such a holder). The BMA may object to such a
person and require the holder to reduce its holding of ordinary shares and direct, among other things, that voting
rights attaching to the ordinary shares shall not be exercisable.
Bermuda Operations

BMA Insurance Regulation

The Insurance Act 1978 of Bermuda and related regulations, as amended (together, the "Insurance Act"), regulate
the (re)insurance business of our operating subsidiaries in Bermuda. The Insurance Act imposes certain solvency
and liquidity standards and auditing and reporting requirements and grants the BMA powers to supervise,
investigate, require information and the production of documents and intervene in the affairs of (re)insurance
companies.

Significant requirements pertaining to our regulated Bermuda subsidiaries vary depending on the class in which our
company is registered, but generally include the appointment of a principal representative in Bermuda, the

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ITEM 1 | Business | Regulation

appointment of an independent auditor, the appointment of an approved loss reserve specialist to opine on the
statutory technical provisions of our insurance reserves, the filing of annual statutory and either U.S generally
accepted accounting principles (“U.S. GAAP”) based consolidated or condensed financial statements, the filing of
annual statutory financial returns, the filing of quarterly financial returns, compliance with group solvency and
supervision rules, and compliance with the Insurance Code of Conduct (relating to corporate governance, risk
management and internal controls).

Our regulated Bermuda subsidiaries must also comply with a minimum liquidity ratio and minimum solvency margin.
The minimum liquidity ratio requires that the value of relevant assets must not be less than 75% of the amount of
relevant liabilities. The minimum solvency margin, which varies depending on the class of the insurer, is determined
as a percentage of either net reserves for losses and LAE or premiums. Each of our regulated Bermuda-domiciled
insurers is also subject to an ECR determined pursuant to a risk-based capital measure and are required to file a
Commercial Insurer’s Solvency Self-Assessment (“CISSA”), and a financial condition report with the BMA. As of
December 31, 2022, each of our Bermuda-based (re)insurance subsidiaries exceeded their respective minimum
solvency and liquidity requirements.

Each of our regulated Bermuda subsidiaries would be prohibited from declaring or paying any dividends if it were in
breach of its minimum solvency margin or liquidity ratio or if the declaration or payment of such dividends would
cause it to fail to meet such margin or ratio. In addition, each of our regulated Bermuda subsidiaries is prohibited,
without the prior approval of the BMA, from reducing by 15% or more its total statutory capital, or from reducing by
25% of more its total statutory capital and surplus, as set out in its previous year’s statutory financial statements.
Our Bermuda (re)insurance companies that are in run-off are required to seek BMA approval for any dividends or
distributions.

Economic Substance Act

Under the provisions of the Economic Substance Act 2018 (the "ESA"), any Bermuda-registered entity engaged in a
“relevant activity” (which includes insurance business and holding entity activities) must maintain a substantial
economic presence in Bermuda. To the extent that the ESA applies to our entities registered in Bermuda, we are
required to demonstrate compliance with economic substance requirements by filing an annual economic substance
declaration with the Registrar of Companies in Bermuda.
U.K. Operations

PRA and FCA Regulation

Our U.K.-based insurance subsidiaries consist of wholly-owned run-off companies. These subsidiaries are
authorized and regulated by the U.K. Prudential Regulation Authority (the "PRA"), and are also regulated by the
Financial Conduct Authority (the "FCA", together with the PRA, the "U.K. Regulator"). Our U.K. run-off subsidiaries
may not underwrite new business without the approval of the U.K. Regulator.

Our U.K.-based insurance subsidiaries are required to maintain adequate financial resources in accordance with the
requirements of the U.K. Regulator. The calculation of the minimum capital resources requirements in any particular
case depends on, among other things, the type and amount of insurance business written and claims paid by the
insurance company. As of December 31, 2022, each of our U.K.-based insurance subsidiaries maintained capital in
excess of the minimum capital resources requirements.

The Solvency II framework sets out requirements on capital adequacy and risk management for insurers. To the
extent that Solvency II was already adopted by U.K. legislation, it remains in force post-Brexit. Insurers must comply
with a Solvency Capital Requirement ("SCR"), which is calculated using either the Solvency II standard formula or a
bespoke internal model. Our non-Lloyd's U.K. companies use the standard formula. It remains to be seen to what
extent the U.K. will depart from the requirements of Solvency II post-Brexit in any new U.K. legislation that may be
introduced.

The U.K. Regulator’s rules require our U.K. insurance subsidiaries to obtain regulatory approval for any proposed or
actual payment of a dividend. The U.K. Regulator uses the SCR, among other tests, when assessing requests to
make distributions.

Under the Financial Services and Markets Act of 2000 ("FSMA"), any company or individual (together with its
concert parties) proposing to directly or indirectly acquire "control" over a U.K. authorized insurance company
(which is generally defined as acquiring 10% or more of the shares or voting power in a U.K. authorized insurance
company or its parent company) must seek prior approval of the U.K. Regulator of its intention to do so. A person

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ITEM 1 | Business | Regulation

who is already deemed to have "control" will require prior regulatory approval if the person increases the level of
"control" beyond 20%, 30% and 50%.

Lloyd’s Regulation

We participate in the Lloyd’s market through our interests in: (i) Syndicate 2008, a syndicate that has permission to
underwrite RITC business and other run-off or discontinued business type transactions with other Lloyd's
Syndicates; (ii) Syndicate 1301 (2020 and prior underwriting years), which is managed by Enstar Managing Agency
Limited ("EMAL") (EMAL also serves as managing agent for Syndicate 2008); and (iii) Atrium's Syndicate 609 (2020
and prior underwriting years), which is managed by Atrium Underwriters Limited, a Lloyd's managing agent.

Our Lloyd’s operations are subject to authorization and regulation by the U.K. Regulator and compliance with the
Lloyd’s Act(s) and Byelaws and regulations, as well as the applicable provisions of the FSMA. The Council of
Lloyd’s has wide discretionary powers to regulate its members, and its exercise of these powers might affect the
return on an investment of the corporate member in a given underwriting year. This discretion includes the ability to
assess up to 3% of a member’s underwriting capacity in any one year as a Central Fund contribution.

The underwriting capacity of a corporate member of Lloyd’s must be supported by providing a deposit (referred to
as "Funds at Lloyd’s" or “FAL”) in the form of cash, securities, letters of credit or other approved capital instrument in
satisfaction of its capital requirement. The amount of the FAL is assessed quarterly and is determined by Lloyd’s in
accordance with applicable capital adequacy rules. To release their capital, Lloyd’s members are usually required to
have transferred their liabilities through an approved RITC, such as those offered by Syndicate 2008.

Business plans, including maximum underwriting capacity, for Lloyd’s syndicates require annual approval by the
Lloyd’s Franchise Board, which may require changes to any business plan or additional capital to support
underwriting plans.

The Lloyd’s market has applied the Solvency II internal model under Lloyd’s supervision, and our Lloyd’s operations
are required to meet Solvency II standards. The Society of Lloyd's has received approval from the PRA to use its
bespoke internal model under the Solvency II regime.

Lloyd’s approval is required before any person can acquire control of a Lloyd’s managing agent or Lloyd’s corporate
member.
U.S.

Our U.S. (re)insurance subsidiaries are subject to extensive governmental regulation and supervision by the states
in which they are domiciled, licensed and/or eligible to conduct business. We currently have wholly-owned
subsidiary U.S. insurers and reinsurers domiciled in Texas, Missouri and Oklahoma and minority owned affiliates in
Pennsylvania, Delaware, New Jersey and Illinois.

Our U.S. insurers are generally required to maintain minimum levels of solvency and liquidity as determined by law,
and to comply with risk-based capital requirements and licensing rules. Insurers having less statutory surplus than
required by the risk-based capital calculation will be subject to varying degrees of regulatory action. If any of our
U.S. insurers were to have risk-based capital levels that are below required levels, they would be subject to
increased regulatory scrutiny and control by their domestic and possibly other insurance regulators. As of December
31, 2022, all of our U.S. insurers exceeded their required levels of risk-based capital.

Applicable insurance laws also limit the amount of dividends or other distributions our U.S. insurers can pay to us.
The insurance regulatory limitations on dividends are generally based on statutory net income and/or certain levels
of statutory surplus as determined by the insurer’s state or states of domicile and approval must be obtained before
an insurer may pay a dividend or make a distribution above these thresholds.

All states have enacted legislation regulating insurance holding company systems that requires each insurance
company in the system to register with the insurance department of its state of domicile and furnish information
concerning the operations of companies within the holding company system that may materially affect the
operations, management or financial condition of the insurers within the system. The NAIC’s Insurance Holding
Company System Regulatory Act and associated regulations provide regulators with tools to evaluate risks to an
insurance company within the insurance holding company system. They impose extensive informational
requirements on parents and other affiliates of licensed insurers with the purpose of protecting them from enterprise
risk, including requiring an annual enterprise risk report by the ultimate controlling person of the insurers identifying

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ITEM 1 | Business | Regulation

the material risks within the insurance holding company system that could pose enterprise risk to the insurers and
requiring a person divesting its controlling interest to make a confidential advance notice filing.

The NAIC’s Risk Management and Own Risk and Solvency Assessment Model Act requires insurers to maintain a
risk management framework and establishes a legal requirement for insurers or their insurance group to conduct an
Own Risk and Solvency Assessment ("ORSA") in accordance with the NAIC’s ORSA Guidance Manual. The ORSA
Model Act subjects our insurance subsidiaries to ORSA requirements if certain premium thresholds are exceeded.
Where applicable, we must regularly conduct an ORSA consistent with the ORSA Model Act, including undertaking
an internal risk management review no less often than annually and preparing a summary report assessing the
adequacy of risk management and capital in light of our insurers’ current and future business plans.

The NAIC’s Corporate Governance Annual Disclosure (“CGAD”) Model Act and Regulation requires the annual filing
of a disclosure describing the insurance group’s corporate governance structure, policies, and practices. The Model
Act and Regulation have been adopted in most of the states in which we have insurers domiciled. There are no
premium thresholds for CGAD.

Before a person can acquire control of a domestic insurer or any person controlling such insurer, prior written
approval must be obtained from the insurance commissioner of the state in which the domestic insurer is domiciled
and, under certain circumstances, from insurance commissioners in other jurisdictions. Generally, state statutes and
regulations provide that "control" over a domestic insurer or person controlling a domestic insurer is presumed to
exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing,
10% or more of the voting securities or securities convertible into voting securities of the domestic insurer or of a
person who controls the domestic insurer.
Australia

Our Australian regulated insurance entity is subject to prudential supervision by the Australian Prudential Regulation
Authority ("APRA"). APRA is the primary regulatory body responsible for regulating compliance with the Insurance
Act 1973. APRA has issued prudential standards that apply to general insurers in relation to capital adequacy
(under a wide range of scenarios), the holding of assets in Australia, risk management, business continuity
management, reinsurance management, outsourcing, audit and actuarial reporting and valuation, the transfer and
amalgamation of insurance businesses, governance, and the fit and proper assessment of the insurer’s responsible
persons.

APRA also prescribes prudential standards on risk management and governance. Our Australian regulated
insurance entity is compliant with these requirements.

An insurer must obtain APRA’s written consent prior to making any capital releases, including any payment of
dividends in excess of current year earnings. Our insurance subsidiary must provide APRA with a valuation
prepared by an appointed actuary that demonstrates that the tangible assets of the insurer, after the proposed
capital release, are sufficient to cover its insurance liabilities to a 99.5% level of sufficiency of capital before APRA
will consent to a capital release or dividend above the prescribed limit.

Under the Financial Sector (Shareholdings) Act 1998, the interest of an individual shareholder or a group of
associated shareholders in an insurer is generally limited to a 15% "stake" of the insurer. A person’s stake is the
aggregate of the person’s voting power and the voting power of the person’s associates. A higher percentage limit
may be approved by the Treasurer of the Commonwealth of Australia on national interest grounds. Any shareholder
of Enstar with a "stake" greater than 15% has received approval to hold that stake from the Treasurer of the
Commonwealth of Australia.
Europe

We have subsidiaries in Belgium, as well as StarStone Insurance SE ("SISE"), a Liechtenstein-based company that
is regulated by the Financial Markets Authority. Our subsidiaries and branches in European jurisdictions are
regulated in their respective home countries. As of January 1, 2023, the UK branch of SISE is also regulated by the
UK Regulator following the expiration of the applicable Brexit transitional provisions. The application of the Solvency
II framework across such European jurisdictions generally results in a uniform approach to regulation. Typically,
such regulation is for the protection of policyholders and ceding insurance companies rather than shareholders.
Regulatory authorities generally have broad supervisory and administrative powers over such matters as licenses,
standards of solvency including minimum capital and surplus requirements, investments, reporting requirements

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ITEM 1 | Business | Regulation

relating to capital structure, ownership, financial condition and general business operations, special reporting and
prior approval requirements with respect to certain transactions among affiliates, reserves for unpaid losses and
LAE, reinsurance, dividends and other distributions to shareholders, periodic examinations and annual and other
report filings.
Available Information About Enstar

Our website is http://www.enstargroup.com. We make available free of charge, through our Investor Relations
section of our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-
K, and all amendments to these reports, as soon as reasonably practicable after the material is electronically filed
with or otherwise furnished to the U.S. Securities and Exchange Commission (the "SEC").

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments
to those reports are also available on the SEC’s website at http://www.sec.gov.

In addition, copies of our Code of Conduct and the governing charters for the Audit, Compensation, Executive,
Investment, Nominating and Governance, and Risk Committees of our Board of Directors are available free of
charge through our Corporate Governance section of our website.

The information contained on our website is not included as a part of, or incorporated by reference into, this filing.

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ITEM 1A. | Risk Factors

ITEM 1A. RISK FACTORS

Any of the following risk factors could cause our actual results to differ materially from historical or anticipated
results. These risks and uncertainties are not the only ones we face. There may be additional risks that we currently
consider not to be material or of which we are not currently aware, and any of these risks could cause our actual
results to differ materially from historical or anticipated results.

You should carefully consider these risks along with the other information included in this document, including the
matters addressed above under "Cautionary Note Regarding Forward-Looking Statements" before investing in any
of our securities. We may amend, supplement or add to the risk factors described below from time to time in future
reports filed with the SEC.

We have categorized our risk factors into the following areas:

•

Risks Relating to our Run-off Business

Risks Relating to Taxation

Risks Relating to Liquidity and Capital Resources

Risks Relating to our Investments

Risks Relating to Laws and Regulations

Risks Relating to our Operations

•
Risks Relating to Ownership of our Shares
Risks Relating to our Run-off Business

Inadequate loss reserves could reduce our net earnings and capital surplus, which could have a materially
adverse impact on our results of operations and financial condition.

We are required to maintain a best estimate of reserves to cover the estimated ultimate liability for losses and LAE
for both reported and unreported incurred claims. As of December 31, 2022, gross reserves for losses and LAE
reported on our balance sheet were $13.0 billion. The process of establishing these reserves includes a significant
level of judgment. As a result, these reserves are only estimates of what we expect the settlement and
administration of claims will cost based on facts and circumstances known to us, as well as actuarial methodologies,
historical industry loss ratio experience, loss development patterns, estimates of future trends and developments
and other variable factors such as inflation. For example, while we monitor and adjust our reserves for the expected
impact of inflation, the inherent uncertainties and inherent judgments that surround the estimation process make it
so that we cannot be certain that our ultimate losses will not exceed our recorded estimates of losses and LAE.

We cannot be certain that ultimate losses will not exceed our recorded estimates of losses and LAE because of the
uncertainties and inherent judgements that surround the estimation process (which are discussed in "Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting
Estimates - Losses and Loss Adjustment Expenses"). As a result, actual losses and LAE paid will deviate, perhaps
substantially, from the reserve estimates reflected in our financial statements due to legal, judicial, social or other
factors. If our reserves are insufficient to cover our actual losses and LAE, we would have to augment our reserves
and incur a charge to our earnings. Such a charge could be material and would reduce our net earnings and capital
and surplus. Further, our success is dependent upon our ability to accurately assess the reserves associated with
our existing businesses and the business that we will acquire in the future.

In our Run-off business, loss reserves include A&E liabilities of $2.0 billion as of December 31, 2022. We also hold
defendant liabilities associated with personal injury A&E claims from acquired companies with legacy manufacturing
businesses. As of December 31, 2022, defendant A&E liabilities reported on our balance sheet were $607 million.
Ultimate values for A&E claims cannot be estimated using traditional reserving techniques, and there are significant
uncertainties in estimating losses for these claims. Factors contributing to the uncertainty include long waiting
periods, reporting delays and difficulties identifying contamination sources and allocating damage liability.
Developed case law and adequate claim history do not always exist for A&E claims, and changes in the legal and
tort environment affect the development of such claims.

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ITEM 1A. | Risk Factors

In addition, evolving industry practices and legal, judicial, social, and environmental conditions may result in
unexpected claims and coverage issues that could adversely affect the adequacy of our loss reserves by extending
coverage beyond the envisioned scope of insurance policies and reinsurance contracts, or by increasing the
number or size of claims. Our exposure to these uncertainties could be exacerbated by an increase in insurance
and reinsurance contract disputes, arbitration and litigation, as well as social and economic inflation trends,
including expanded theories of liability and higher jury awards. For example, in areas such as mass tort litigation,
we continue to see damages awarded that far exceed the economic damages of the claimant. Increasingly, the
handling of insurance claims can also lead to bad faith or other forms of extra-contractual damages. These trends
may not become apparent until long after we have acquired or assumed the affected insurance policies.

We may not be able to sustain our growth through acquisitions.

We pursue growth through financially beneficial acquisitions of companies and portfolios of (re)insurance business.
Because the execution of our claims management strategies and associated payments result in the reduction of our
loss reserves and LAE over time, we must continually acquire an adequate amount of run-off business that aligns
with our strategic objectives to grow liabilities and assets under management. However, the acquisition of suitable
run-off business is highly competitive and driven by many factors, including proposed acquisition price, reputation,
collateral arrangements, and financial resources. Competitors continue to enter the insurance run-off space, and as
a result, we may be unable to consummate acquisition transactions at acceptable prices and on acceptable terms,
or at all, which could hinder our future growth.

The evaluation and negotiation of potential run-off acquisitions, as well as the integration of acquired businesses or
portfolios in run-off, can be complex and costly and requires substantial management resources. Once we have
signed a definitive agreement to acquire a business or portfolio, conditions to closing, such as obtaining regulatory
or shareholder approvals, must be met prior to completing the acquisition. These and other closing conditions may
not be satisfied, or may cause a material delay in the anticipated timing of closing. Such a failure or delay could
result in significant expense, diversion of time and resources, reputational damage, litigation and a failure to realize
the anticipated benefits of an acquisition, all of which could materially adversely impact our business, financial
condition and results of operations.

Our acquisitions could involve additional risks that we may not be able to identify during the due diligence process,
such as losses from unanticipated litigation, levels of covered claims or other liabilities and exposures, an inability to
generate sufficient investment income and other revenue to offset acquisition costs and other financial exposures.
Further, our counterparties may breach their representations and warranties and/or be unable or unwilling to meet
their contractual obligations to us.

We may not be able to realize the anticipated benefits of acquisitions, which may result
in
underperformance relative to our expectations and have a material adverse effect on our business, financial
condition or results of operations.

To achieve positive operating results from an acquisition, we must first price the transaction on favorable terms
relative to the risks posed, and then we must successfully manage the acquired reserves and investments. Unlike
traditional insurers and reinsurers, our companies and loss portfolios no longer underwrite new policies or collect
underwriting premiums, and their stated provisions for losses and LAE may not be sufficient to cover future losses
and the cost of run-off. Failure to successfully manage such reserves, including by effectively managing claims,
collecting from insurers or reinsurers, controlling expenses and generating positive investment returns in line with
our pricing assumptions, could result in us having to cover losses sustained with capital, which would materially and
adversely impact our ability to grow our business and may result in material losses.

Further, the acquisitions we have made and expect to make in the future may pose operational challenges that
expose us to risks relating to:

•

the value of liabilities assumed being greater than expected;

the value of assets or our anticipated return on assets being lower than expected or diminishing for reasons
including credit defaults, changes in interest rates, declines in market value, inflation or delays in
implementation of our intended investment strategies;

funding cash flow shortages that may occur if anticipated revenues are not realized or are delayed, if expenses
are greater than anticipated, or if assets are not liquid;

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ITEM 1A. | Risk Factors

•

integrating financial and operational reporting systems and internal controls of acquired businesses, including
compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and our reporting requirements under the
Exchange Act;

leveraging our existing capabilities and expertise into the business acquired and establishing synergies within
our organization;

funding increased capital needs and overhead expenses;

integrating technology platforms and managing any increased cybersecurity risk;

the timely transfer and integrity of data needed to manage acquired business;

obtaining and retaining management personnel required for expanded operations;

fluctuating foreign currency exchange rates relating to the assets and liabilities we may acquire;

goodwill and intangible asset impairment charges; and

complying with applicable laws and regulations.

If we are unable to address some or all of these challenges, our acquisitions may underperform relative to our
expectations and our business may be materially and adversely affected.

Climate change may have an adverse impact on the returns from our run-off business as well as our
investments, which could have an adverse effect on our results of operations or financial condition.

Our core focus is on acquiring and managing reinsurance companies and portfolios of reinsurance business in run-
off, and as such climate change presents unique risks to our business stemming from insurance liabilities we
acquire and the assets that back those liabilities. As we acquire liabilities, there is a risk that our current practices
and processes do not successfully identify and/or price the risks arising from climate change, which could result in
actual returns deviating adversely from those assumed when the transaction was priced. In addition, the disruption
caused by changes in technology, governments and regulation as part of a societal transition to a lower carbon
emitting economy could expose our investment portfolio to a loss of value in the near term and long term. For
example, a swift, adverse repricing of carbon-intensive financial assets could expose our investments to losses in
the near term and in the long term if the transition to a lower carbon-emitting economy is associated with increased
production costs. Additionally, achieving any sustainability goals and commitments that we may set for ourselves in
the future, or be required to meet, such as net zero greenhouse gas emissions, will require efforts that could
significantly increase our costs of operations.
Risks Relating to Taxation

U.S. tax reform legislation, various international tax transparency and economic substance initiatives, and
possible future tax reform legislation and regulations could materially affect us and our shareholders.

The Organization for Economic Co-operation and Development ("OECD") Pillar II initiative proposes a global
minimum tax rate of 15% amongst its 142 member nations and other adopting countries. On December 20, 2021,
the OECD released the final model rules on Pillar II (the “Model Rules”), which nations can adopt into local
legislation to implement Pillar II on a global basis.

Three components of the Model Rules, the Income Inclusion Rule (“IIR”), the Under-Taxed Profit Rule (“UTPR”),
and the Qualified Domestic Minimum Top up Tax (“QDMTT”) could potentially be applicable to our operations:

•

The IIR establishes a global minimum tax in the jurisdiction of the parent company of a multinational enterprise
(“MNE”). There is no current indication that Bermuda intends full implementation of the Model Rules.

The UTPR, allows a portion of an MNE’s global profits with an effective tax rate below the 15% minimum rate to
be taxed by other jurisdictions through an allocation model based on headcount and fixed tangible assets. The
Model Rules give flexibility to allow jurisdictions several mechanisms to collect global profits. This includes
directly taxing allocated income, reduction in any allowance for equity or by imputing deemed income.

The Model Rules also propose that jurisdictions consider implementing a 15% QDMTT, which could qualify in
substitution to the IIR, and could preclude other jurisdictions from utilizing the UTPR for taxing local profits.

The OECD is targeting the implementation of the IIR by 2024, and UTPR by 2025.

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ITEM 1A. | Risk Factors

On July 20, 2022, the UK government released draft legislation to implement the IIR for accounting periods
beginning on or after December 31, 2023.

On November 17, 2022, the UK announced its intention to legislate a QDMTT and it is expected that other
jurisdictions may follow suit in the coming year.

On December 15, 2022, the European Union (“EU”) member states unanimously adopted the Minimum Tax
Directive, which provides guidance for enacting national legislation for the IIR and UTPR. The IIR will be applicable
in EU member states for fiscal years starting on or after December 31, 2023, and the UTPR for fiscal years starting
on or after December 31, 2024.

How Pillar II impacts our operations will heavily depend on how these rules are ultimately transposed into the local
legislation of countries we operate in. Specifically, the planned adoption of the UTPR in the U.K. could have a
material impact on our net earnings, which is dependent on how the UTPR is ultimately legislated in the U.K. We
continue to monitor legislative changes as it relates to Pillar II and believe that the earliest material impact to the
Company will be in 2025.

We might incur unexpected U.S., U.K., Australia, or other tax liabilities if companies in our group that are
incorporated outside those jurisdictions are determined to be carrying on a trade or business in such
jurisdictions.

We are currently not subject to tax in Bermuda. Under the Exempted Undertakings Tax Protection Act 1996, we
have assurance that any legislation imposing an income, capital, or similar tax before March 31, 2035, will not apply
to us. Given limitations imposed under this assurance, we cannot be certain that we will not be subject to tax after
March 31, 2035. If our Bermuda profits are subject to tax in Bermuda or any other jurisdiction, this could have a
material adverse impact on our business operations. Furthermore, a number of our subsidiaries are companies
formed under the laws of Bermuda or other jurisdictions that do not impose income taxes, and it is our
contemplation that these companies will not incur substantial income tax liabilities from their operations. Because
the operations of these companies generally involve, or relate to, the insurance or reinsurance of risks that arise in
higher tax jurisdictions, such as the United States, the United Kingdom and Australia, it is possible that the taxing
authorities in those jurisdictions may assert that the activities of one or more of these companies creates a sufficient
nexus in that jurisdiction to subject the company to income tax in such jurisdiction. There are uncertainties in how
the relevant rules apply to insurance businesses, and in our eligibility for favorable treatment under applicable tax
treaties. Accordingly, it is possible that our tax liabilities could be adversely impacted, which could reduce our net
earnings.

U.S. persons who own our ordinary shares might become subject to adverse U.S. tax consequences as a
result of "related person insurance income," if any, of our non-U.S. insurance company subsidiaries.

For any of our wholly-owned non-U.S. insurance company subsidiaries, if (1) U.S. persons are treated as owning
25% or more of our shares, (2) the related person insurance income ("RPII") of that subsidiary were to equal or
exceed 20% of its gross insurance income in any taxable year, and (3) direct or indirect insureds of that subsidiary
(and persons related to such insureds) own (or are treated as owning) 20% or more of the voting power or value of
our shares, then a U.S. person who owns our shares directly, or indirectly through non-U.S. entities, on the last day
of the taxable year would be required to include in income for U.S. federal income tax purposes that person's pro
rata share of the RPII of such a non-U.S. insurance company for the entire taxable year, whether or not any such
amounts are actually distributed. While proposed regulations put forth by the United States Department of Treasury
and Internal Revenue Service on January 24, 2022 may change some of the ownership thresholds needed to
qualify into RPII, we believe that some of the income thresholds above are not likely to be met. However, we cannot
assure you that this will be the case. Accordingly, it is possible that a direct or indirect United States shareholder
could be required to include amounts in its income in respect to RPII in any taxable year if the proposed regulations
are finalized in their current form. We believe that these proposed changes would not affect the gross income
threshold described above. These proposed regulations were subject to a 90-day comment period that ended on
April 25, 2022. Comments submitted to these proposed regulations requested changes to the proposed regulations
to ask that structures such as Enstar's not be subject to these rules. If these proposed regulations are finalized as
proposed, they would be effective for tax years ending on or after January 25, 2022. Whether they will be finalized
as proposed remains unclear.

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ITEM 1A. | Risk Factors

Risks Relating to Liquidity and Capital Resources

The amount of statutory capital that we must hold in order to maintain our credit ratings and meet certain
regulatory requirements can vary significantly and is sensitive to several factors.

Statutory capital requirements for our insurance subsidiaries are prescribed by the applicable insurance regulators
in the jurisdictions in which we operate. Insurance regulators have established risk-based capital adequacy
measures, such as the Bermuda Solvency Capital Requirement ("BSCR") in Bermuda and the Solvency II regime in
the European Union and United Kingdom, which provide minimum solvency and liquidity requirements for insurance
companies. The amount of capital that we and/or our insurance subsidiaries are required to hold may increase or
decrease depending on a variety of factors including the amount of statutory income or losses generated by our
insurance subsidiaries (which is sensitive to equity market and credit market conditions), the amount of statutory
capital needed to support future growth through acquisitions, changes in the value of investments, the deterioration
of market conditions due to global events, changes in interest rates and foreign currency exchange rates, as well as
changes to the relevant regulatory capital adequacy measures and frameworks. Our overall liquidity and credit
ratings are significantly influenced by the level of statutory capital and surplus in our insurance subsidiaries. If
statutory capital requirements increase or if our insurance subsidiaries' solvency decreases, our subsidiaries would
be required to hold more capital, and our ability to obtain distributions from these subsidiaries could be limited. If we
fail to maintain adequate statutory capital, regulators may restrict our activities and prohibit us and our subsidiaries
from completing acquisitions without raising additional capital. Additionally, if our BSCR falls below certain levels, it
could trigger counterparty recapture rights and/or additional collateral requirements in certain of our reinsurance
agreements.

We may require additional capital liquidity in the future that may not be available or may only be available
on unfavorable terms.

Our future capital requirements depend on many factors, including acquisition and investment activity, our ability to
manage the run-off of our assumed liabilities, our ability to establish reserves at levels sufficient to cover losses, and
our obligations to satisfy applicable statutory capital requirements. We may need to raise additional capital and
liquidity through equity or debt financings. Our ability to secure this financing may be affected by a number of
factors, including volatility in the global financial markets, new or incremental tightening in the credit markets, low
liquidity and the strength of our capital position and operating results. In addition, an unfavorable change or
downgrade of our issuer credit ratings will increase the interest rate or other fees charged under our debt facilities
and will make it more expensive for us to access capital markets. Any equity or debt financing, if available at all,
may be on terms that are not favorable to us, and could limit our strategic, financial and operational flexibility,
including as a result of the need to dedicate a greater portion of our cash flows from operations to preferred share
dividends and interest and principal payments on our debt financing and to comply with more burdensome covenant
restrictions from our various debt and letter of credit facilities.

In addition, we may not achieve the desired regulatory capital treatment for any potential issuance of debt or equity
securities due to solvency capital eligibility requirements under the Bermuda Insurance (Group Supervision) Rules
2011 (the "Group Supervision Rules") to which we are subject. For example, our outstanding preferred shares and
junior subordinated notes qualify as Tier 2 capital and our outstanding senior notes qualify as Tier 3 capital, in
accordance with the Group Supervision Rules. For these instruments to continue to receive the intended regulatory
capital treatment, their terms must reflect the criteria contained in the Group Supervision Rules and any
amendments thereto. If the BMA applies any changes to the Group Supervision Rules governing eligible capital
such that our outstanding preferred shares and notes no longer receive their intended capital treatment under the
Group Supervision Rules, we may be unable to maintain adequate regulatory capital. If we cannot obtain adequate
capital or regulatory credit, our business, results of operations and financial condition could be adversely affected
by, among other things, our inability to finance future acquisitions.

Our reinsurance subsidiaries are often required to provide collateral to ceding companies pursuant to their
reinsurance contracts. Their ability to conduct business could be significantly and negatively affected if
they are unable to do so or if any letters of credit posted as collateral cannot be renewed or are drawn upon
by a ceding company.

Our reinsurance subsidiaries are often required to post collateral in the form of letters of credit, trust funds or other
assets to provide security for their reinsurance obligations and to provide ceding companies with statutory credit for
such reinsurance. If our reinsurance subsidiaries are unable to post the required collateral or the cost of providing

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ITEM 1A. | Risk Factors

such collateral materially increases, their operations could be significantly and negatively affected, which in turn
could limit our ability to complete new reinsurance transactions on favorable terms or at all, which could negatively
impact our business, financial condition and results of operations. Depending on multiple factors, our reinsurance
subsidiaries may not be able to secure letters of credit to satisfy requirements to post collateral in support of their
reinsurance obligations. If our reinsurance subsidiaries cannot post collateral in the form of letters of credit, then our
reinsurance subsidiaries will have to post substitute collateral in the form of trust funds or other assets, limiting our
ability to invest (and consequently reducing investment income from) such assets and constraining our liquidity,
which could negatively impact our business, financial condition and results of operations. In addition, if the
beneficiary of any letter of credit draws funds against the letter of credit, we would be obligated to immediately
reimburse the bank that issued the letter of credit the amount of such drawn funds, which could increase our
indebtedness and negatively affect our liquidity and financial condition.

Reinsurers may not satisfy their obligations to our reinsurance subsidiaries, which could result in
significant losses or liquidity issues for us.

Our reinsurance subsidiaries are subject to credit risk with respect to their reinsurers because the transfer of risk to
a reinsurer does not relieve our subsidiaries of their liability to the underlying insured. Reinsurance companies may
be negatively impacted or downgraded during difficult financial and economic conditions. In addition, reinsurers may
be unwilling to pay our subsidiaries even though they are able to do so, or disputes may arise regarding payment
obligations. The failure of one or more of our subsidiaries’ reinsurers to honor their obligations in a timely fashion
may affect our cash flows and liquidity, reduce our net earnings or cause us to incur a significant loss. Disputes with
our reinsurers may also result in unforeseen expenses relating to litigation or arbitration proceedings. A reinsurer’s
inability or unwillingness to honor its obligations may negate the intended risk-reducing impact of our reinsurance.

Exposure to reinsurers who represent meaningful percentages of our total reinsurance balances recoverable on
paid and unpaid losses may increase the risks described above. For information on reinsurance balances
recoverable on paid and unpaid losses, see "Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources - Reinsurance Balances Recoverable on Paid and
Unpaid Losses."

We are dependent on the ability of our subsidiaries to distribute funds to us.

We are a holding company and therefore we are dependent on distributions of funds from our operating subsidiaries
to fund acquisitions, fulfill normal course financial obligations, including payments on our outstanding notes, and pay
dividends to our shareholders, including holders of our preferred shares and, in turn, the related depositary shares.
The ability of our reinsurance subsidiaries to make distributions to us may be limited by various business
considerations and applicable insurance laws and regulations in jurisdictions in which we operate (which are
described in "Item 1. Business - Regulation"). The ability of our subsidiaries to make distributions to us may also be
restricted by, among other things, other applicable laws and regulations and the terms of our debt obligations and
our subsidiaries’ debt obligations. If our subsidiaries are restricted from making distributions to us, we may be
unable to maintain adequate liquidity to fund acquisitions or fulfill our financial obligations.

Fluctuations in currency exchange rates may cause us to experience losses.

We maintain a portion of our investments, insurance liabilities and insurance assets denominated in currencies
other than U.S. dollars. Consequently, we and our subsidiaries may experience foreign exchange losses, which
could adversely affect our results of operations. Our reporting currency in our consolidated financial statements is
U.S. dollars, therefore, fluctuations in exchange rates used to convert other currencies used by our subsidiaries,
particularly Australian dollars, Canadian dollars, British pounds and Euros, into U.S. dollars will impact our reported
financial condition, results of operations and cash flows from year to year.

Risks Relating to our Investments

The value of our investment portfolios and the investment income that we receive from these portfolios may
decline materially as a result of market fluctuations and economic conditions.

We derive a significant portion of our income from our invested assets, which consist primarily of investments in
fixed income securities. The value of our investments in fixed income securities will generally increase or decrease
with changes in interest rates and credit spreads. Interest rates are highly sensitive to many factors, including
governmental monetary policies, domestic and international economic and political conditions and other factors

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ITEM 1A. | Risk Factors

beyond our control. A rise in interest rates would, all else being equal (i.e., no movement in credit spreads), increase
net unrealized losses, which would decline over time as each security approaches maturity. Conversely, a decline in
interest rates, all else being equal, would increase net unrealized gains, which would decline over time as each
security approaches maturity. Additionally, new investments of cash or the reinvestment of proceeds from sales of
securities would be invested at the prevailing interest rates for each security, thereby increasing or decreasing net
investment income on those proceeds. The fair market value of fixed income securities can also decrease as a
result of a deterioration of the credit quality of those securities. Any perceived decrease in credit quality may cause
credit spreads to widen, all else being equal, and this would result in an increase in net unrealized losses, which
would decline over time as each security approaches maturity, assuming it does not default. A deterioration of credit
quality on our fixed income securities may result in a preference to liquidate these securities in the financial
markets. If we liquidate these securities during a period of deteriorating credit conditions, we may realize a
significant loss. Although we attempt to take measures to manage the risks of investing in changing interest rate
environments, we may not be able to mitigate interest rate sensitivity effectively. For example, as a result of central
bank efforts to combat high inflation, interest rates increased dramatically, which contributed to the $1.6 billion of net
unrealized losses on our fixed income securities (recorded through the income statement and other comprehensive
income) for the year ended December 31, 2022. Additionally, declining market conditions or a perceived decrease in
credit quality may cause issuers of the fixed income securities in which we invest to default on their obligations. In
addition, we hold public company equity securities. Net investment income and net realized and unrealized gains or
losses from our fixed income securities and equity securities could vary materially from expectations depending on
general market conditions. For example, we may incur impairment charges resulting from revaluations of debt and
equity securities and other investments. Increased volatility in the financial markets and overall economic
uncertainty would increase the risk that the actual amounts realized in the future on our financial instruments could
differ significantly from the fair values currently assigned to them.

Some of our fixed income securities, such as mortgage-based and other asset-backed securities, carry prepayment
risk, or the risk that principal will be returned more rapidly or slowly than expected, as a result of interest rate
fluctuations. When interest rates decline, consumers tend to make prepayments on their mortgages (often through
refinancing), causing us to be repaid more quickly than we might have originally anticipated, meaning that our
opportunities to reinvest these proceeds back into the investment markets may be at reduced interest rates (with the
converse being true in a rising interest rate environment). Mortgage-backed and other asset-backed securities are
also subject to default risk on the underlying securitized mortgages, which would decrease the value of our
investments.

The changes in the market value of our securities that are classified as trading or AFS are reflected in our financial
statements. Credit losses on our fixed income securities, AFS are recognized through an allowance account, which
is also reflected in our financial statements. As a result, a decline in the value of the securities in our investment
portfolios may materially reduce our net income and shareholders’ equity, and may cause us to incur a significant
loss. For more information on our investment portfolios, see "Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations - Investable Assets."

Our investments in alternative investments, strategic investments in joint ventures and/or entities
accounted for using the equity method may be illiquid and volatile in terms of value and returns.

In addition to fixed income securities, we have invested, and may continue to invest, in alternative investments such
as hedge funds, fixed income funds, public equity funds, private equity funds and co-investments, CLO equities,
CLO equity funds, real estate funds and other alternative investments. In addition, we have invested, and we may
continue to make significant investments, in joint ventures and/or entities accounted for using the equity method that
we do not control, which may limit our ability to take actions that could protect or increase the value of our
investment. These and other similar investments may be illiquid due to restrictions on sales, transfers and
redemption terms, may have different, more significant risk characteristics than our investments in fixed income
securities and may also have significantly more volatile values and returns, all of which could negatively affect the
market value of our investments, our investment income, and our overall portfolio liquidity. Alternative or "other"
investments may not meet regulatory admissibility requirements or may result in increased regulatory capital
charges to our insurance subsidiaries that hold these investments, which could limit those subsidiaries’ ability to pay
dividends and make capital distributions to us and, consequently, negatively impact our liquidity. For more
information on our alternative investments, see "Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations - Investable Assets."

Enstar Group Limited | 2022 Form 10-K

The valuation of our investments may include methodologies, estimations and assumptions that are
subject to differing interpretations and could result in changes to investment valuations that may materially
adversely affect our financial condition or results of operations.

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ITEM 1A. | Risk Factors

Fixed maturity and alternative investments, such as hedge funds, fixed income funds, public equity funds, private
equity funds and co-investments, CLO equities, CLO equity funds, real estate funds, private credit funds, and
infrastructure funds and co-investments represent the majority of our total cash and invested assets. These
investments are reported at fair value on our consolidated balance sheet. Fair value prices for all trading and AFS
securities in the fixed maturities portfolio are independently provided by our investment accounting service
providers,
investment custodians, each of which utilize
internationally recognized independent pricing services. We record the unadjusted price provided by our investment
accounting service providers, managers or custodians. Fair value for our alternative investments is estimated based
primarily on the most recently reported net asset values reported by the fund manager. Additionally, for some
strategic investments for which we have elected the fair value option, our valuations of these investments are based
on internal valuation models and methodologies that are subject to estimates and judgements that can vary from
quarter to quarter.

fund administrators, and

investment managers,

These valuation procedures involve estimates and judgments, and during periods of market disruptions (such as
periods of significantly volatile interest rate changes, rapidly widening credit spreads or illiquidity), it may be difficult
to value certain of our securities if trading becomes less frequent or market data becomes less observable. In
addition, there may be certain asset classes that are now in active markets with significant observable data that
become illiquid due to changes in the financial environment. In these cases, the valuation of a greater number of
securities in our investment portfolio may require more subjectivity and management judgment. As a result,
valuations may include inputs and assumptions that are less observable or require greater estimation as well as
valuation methods that are more sophisticated or require greater estimation, which may result in valuations greater
than the value at which the investments could ultimately be sold. Further, rapidly changing and unpredictable credit
and equity market conditions could materially affect the valuation of securities carried at fair value as reported within
our consolidated financial statements and the period-to-period changes in value could vary significantly. Decreases
in value could have a material adverse effect on our financial condition and results of operations.

The nature of our liquidity demands and the structure of our investment portfolios may adversely affect the
performance of our investment portfolio and financial results, as well as our investing flexibility.

We strive to structure the duration of our investments in a manner that recognizes our liquidity needs to satisfy
future liabilities. Because of the unpredictable nature of losses and associated collateral provisions that may arise
under the reinsurance policies issued by certain of our subsidiaries and as a result of our opportunistic commutation
strategy, our liquidity needs can be substantial and may arise at any time. In that regard, we attempt to correlate the
maturity and duration of our investment portfolio to our general liability profile. If we are unsuccessful in managing
our investment portfolio within the context of this strategy, we may be forced to liquidate our investments at times
and at prices that are not optimal, and we may have difficulty liquidating some of our alternative investments due to
restrictions on sales, transfers and redemption terms. This could have a material adverse effect on the performance
of our investment portfolio. Alternatively, we may experience a different investment income yield if the asset duration
is shorter than our liability duration profile which could negatively impact our earnings.

We have many individual portfolios of cash and investments from our acquired companies and portfolios. Each
investment portfolio has its own regulatory admissibility requirements, and each run-off entity is likely to have
negative operating and financing cash flows due to commutation activity, claims settlements and capital
distributions. These factors reduce our overall investing flexibility.

Risks Relating to Laws and Regulations

Insurance laws and regulations can restrict our ability to operate, and any failure to comply with these laws
and regulations, or any investigations, inquiries or demands by government authorities, may have a
material adverse effect on our business.

We are subject to the insurance laws and regulations in a number of jurisdictions worldwide. Existing laws and
regulations, among other things, limit the amount of dividends and capital that can be paid to us by our reinsurance
subsidiaries, prescribe solvency and capital adequacy standards, impose restrictions on the amount and type of
investments that can be held to meet solvency and capital adequacy requirements, require the maintenance of

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ITEM 1A. | Risk Factors

reserve liabilities, and require pre-approval of acquisitions, reinsurance transactions and certain affiliate
transactions. Failure to comply with these laws and regulations or to maintain appropriate authorizations, licenses,
and/or exemptions under applicable laws and regulations may cause governmental authorities to preclude or
suspend our insurance or reinsurance subsidiaries from carrying on some or all of their activities, place one or more
of them into rehabilitation or liquidation proceedings, impose monetary penalties or other sanctions on them or our
affiliates, or commence insurance company delinquency proceedings against our insurance or reinsurance
subsidiaries. The application of these laws and regulations by various governmental authorities may affect our
liquidity and restrict our ability to expand our business operations through acquisitions or to pay dividends on our
ordinary or preferred shares. Furthermore, compliance with legal and regulatory requirements is likely to result in
significant expenses, which could have a negative impact on our profitability. To further understand these regulatory
requirements, see "Item 1. Business - Regulation."

We believe it is likely there will continue to be regulatory intervention in our industry in the future, and these
initiatives could adversely affect our business. Additional laws and regulations have been and may continue to be
enacted that may have adverse effects on our operations, financial condition, statutory capital adequacy, and
liquidity. For example, in many of the jurisdictions in which we operate, including Bermuda, there are increased
regulations relating to group supervision though cooperation and coordination among insurance regulators
regardless of an individual company’s domiciliary jurisdiction. The BMA acts as our Group supervisor, as described
in "Item 1. Business – Regulation." We cannot predict the exact nature, timing or scope of these initiatives; however,
we believe it is likely there will continue to be increased regulatory intervention in our industry in the future, and
these initiatives could adversely affect our business.

Solvency II, the E.U. directive covering the capital adequacy, risk management and regulatory reporting for insurers,
requires significant resources to ensure compliance by our European Economic Area (“EEA”) companies.
Additionally, if our non-EEA subsidiaries engage in insurance or reinsurance business in the EEA, additional capital
requirements may be imposed for such companies to continue to insure or reinsure EEA-domiciled risk or cedants if
their regulatory regime is not deemed to have Solvency II equivalence. Bermuda has gained Solvency II
equivalence, and our Bermuda reinsurers are subject to requirements in line with a Solvency II framework.
Continued compliance with Solvency II and similar laws and regulations will result in additional costs for us.

Our U.K.-based insurance and reinsurance subsidiaries consist of wholly-owned run-off companies that are
authorized and regulated by the U.K. Regulator. Our U.K. run-off subsidiaries may not underwrite new business
without the approval of the U.K. Regulator. In addition, our Lloyd’s operations are subject to authorization and
regulation by the U.K. Regulator and compliance with the Lloyd’s Act(s) and Bylaws and regulations, as well as the
applicable provisions of the FSMA. The Council of Lloyd’s has wide discretionary powers to regulate its members,
and its exercise of these powers might affect the return on an investment of the corporate member in a given
underwriting year. Business plans, including maximum underwriting capacity, for Lloyd’s syndicates require annual
approval by the Lloyd’s Franchise Board. Continued compliance with the rules of the PRA, Lloyd’s and similar
regulators will result in additional costs for us.

Our business is subject to laws and regulations relating to sanctions and foreign corrupt practices, the
violation of which could adversely affect our financial condition and results of operations.

We are legally required to comply with all applicable economic sanctions, anti-bribery, anti-corruption and anti-
money laundering laws and regulations of the jurisdictions in which we operate. U.S. laws and regulations
applicable to our U.S. subsidiaries include the economic trade sanctions laws and regulations administered by the
Treasury’s Office of Foreign Assets Control, as well as certain laws administered by the U.S. Department of State.
New sanction regimes may be initiated, or existing sanctions expanded, at any time, which can impact our business
activities. In addition, our companies are subject to the U.S. Foreign Corrupt Practices Act and other anti-bribery
laws such as the Bermuda Bribery Act and the U.K. Bribery Act that generally bar corrupt payments or unreasonable
gifts to foreign governments or officials. Although we have policies and controls in place that are designed to ensure
compliance with these laws and regulations, it is possible that an employee or intermediary could fail to comply with
applicable laws and regulations. In such event, we could be exposed to civil penalties, criminal penalties and other
sanctions, including fines or other punitive actions. Such civil or criminal penalties, sanctions, fines or other punitive
actions, and the possibility of resulting damage to our business and/or reputation, could have a material adverse
effect on our financial condition and results of operations.

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ITEM 1A. | Risk Factors

Risks Relating to our Operations

We are dependent on our executive officers, directors and other key personnel and the loss of any of these
individuals could adversely affect our business.

Our success depends on the ability of our senior management and other key employees to implement our strategy
and operate our business. For example, our ability to source run-off acquisitions is critical to our business, and is in
part dependent on the relationships of our senior management and other key personnel. The loss of their services
or the services of other key personnel, or the loss of the services of or our relationships with any of our directors,
could have a material adverse effect on our business.

Some of our directors, large shareholders and their affiliates have interests and/or other involvement with
entities that can create conflicts of interest through related party transactions.

We have participated in transactions, investments and investment management arrangements in which one or more
of our directors, large shareholders or their affiliates has an interest, and we may continue to do so in the future.
Refer to Note 23 to our consolidated financial statements for further disclosure on these arrangements. In addition,
some of our directors, large shareholders or their affiliates from time to time have ownership interests or other
involvement with entities that compete against us or otherwise have interests that could, at times, be considered
potentially adverse to us, either in the pursuit of acquisition targets, investments or in our business operations. The
interests of our directors, large shareholders or their affiliates in related party transactions or competitive businesses
may create the potential for, or result in, conflicts of interests.

Cybersecurity events or other difficulties with our information technology systems could disrupt our
business, result in the loss of critical and confidential information, increased costs, and adversely impact
our reputation and results of operations.

We rely heavily on the successful, uninterrupted functioning of our information technology systems, as well as those
of any outsourced service providers, including third-party administrators and investment managers. We rely on
these systems to securely and accurately process, store, and transmit confidential and other data in connection with
our critical operational functions such as paying claims, performing actuarial and other modeling, pricing, quoting
and processing policies, cash and investment management, acquisition analysis, financial reporting and other
necessary support functions. Our information may also be exposed to the risk of a data breach or cyber-security
incident through a breach or failure of our systems or a breach or failure of the systems of third parties where we
rely on such parties for outsourced functions or services. A failure of our information technology systems or those of
our third-party service providers could materially impact our ability to perform the critical functions described above,
affect the confidentiality, availability or integrity of our proprietary information and expose us to litigation and
increase our administrative expenses.

Computer viruses, cyber-attacks, phishing scams and other external hazards, as well as any internal process or
employee failures, could expose our information technology systems to security breaches that may cause critical
data to be corrupted or confidential or proprietary information to be exposed, cause system disruptions or shut-
downs, or expose us to financial fraud. In addition to our own information, we receive and may be responsible for
protecting confidential or personal information of ceding companies, policyholders, employees, and other third
parties, which could also be compromised in the event of a security breach. In addition, many of our employees
work remotely, and we are therefore more dependent on our information technology systems and the continued
access by our employees and service providers to reliable and secure internet and telecommunications systems. If
these systems do not function effectively or are disrupted due to heightened demand, cybersecurity attacks and
data security incidents, or for any other related reason, it would negatively impact our ability to settle claims
efficiently, complete acquisitions, integrate our acquired businesses, manage our investments, or otherwise conduct
our business.

Although we utilize numerous controls, protections and risk management strategies to attempt to mitigate these
risks, and management has not detected a material cyber-security incident to date, the sophistication and volume of
these security threats continues to increase. In addition, the escalation of geopolitical tensions, such as those
caused by the Russian invasion of Ukraine, could result in heightened cybersecurity threats. We may not have the
technical expertise or resources to successfully prevent every data breach or cyber-security incident. The potential
consequences of a data breach or cyber-security incident could include claims against us, significant reputational
damage to our company, damage to our business as a result of disclosure of proprietary information, and regulatory
action against us, which may include fines and penalties. Such an incident could cause us to lose business and

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ITEM 1A. | Risk Factors

commit resources, management time and money to remediate these breaches and notify aggrieved parties, any of
which in turn could have an adverse impact on our business. We may also experience increasing costs associated
with implementing and maintaining adequate safeguards against these types of incidents and attacks.

In addition, the information security and data privacy regulatory environment is increasingly demanding. We are
subject to numerous laws and regulations in multiple jurisdictions governing the protection of the personal and
confidential information of our clients and/or employees, including in relation to medical records and financial
information. These laws and regulations are rapidly expanding, increasing in complexity and sometimes conflict
between jurisdictions. For example, the E.U. General Data Protection Regulation ("GDPR") creates rights for
individuals to control their personal data and sets forth the requirements with which companies handling the
personal data of E.U.-based data subjects have to comply (regardless of whether such data handling involves E.U.-
based operations). We are also subject to the GDPR through our handling of the personal data of E.U.-based
subjects in connection with our ordinary course operations. If any person, including any of our employees or those
with whom we share such information, negligently disregards or intentionally breaches our established controls with
respect to our client data, or otherwise mismanages or misappropriates that data, we could be subject to significant
monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions,
including as a result of a violation of the GDPR.

If outsourced providers such as third-party administrators, investment managers or other service providers
were to breach their obligations to us, our business and results of operations could be adversely affected.

We outsource certain business functions to third-party providers, and these providers may not perform as
anticipated or may fail to adhere to their obligations to us. For example, certain of our subsidiaries rely on
relationships with a number of third-party administrators under contracts pursuant to which these third-party
administrators manage and pay claims on our subsidiaries’ behalf and advise with respect to case reserves. In
these relationships, we rely on controls incorporated in the provisions of the administration agreement, as well as on
the administrator’s internal controls, to manage the claims process within our prescribed parameters. We also rely
on external investment managers to provide services pursuant to the terms of our investment management
agreements, including following established investment guidelines. Although we monitor these administrators and
investment managers on an ongoing basis, we do not control them, and our service providers could exceed their
authorities or otherwise breach their obligations to us, which, if material, could adversely affect our business and
results of operations. For example, a third-party investment manager may breach our investment guidelines and
expose us to risk beyond our prescribed tolerances, which could have an immediate negative financial impact. We
may also be negatively impacted if third-party administrators mishandle claims, fail to administer claims effectively
or efficiently, fail to maintain accurate books and records, or fail to comply with laws or regulations.

Risks Relating to Ownership of our Shares

The market price for our securities may experience volatility, which could cause a potential loss of value to
our investors, and our ordinary shares are thinly traded, so the market value of our ordinary shares may
decline if large numbers of shares are sold.

The market price for our ordinary shares and for the depositary shares representing our preferred shares may
fluctuate substantially and could cause investment losses due to a number of factors. Such factors could include:
announcements with respect to a specific acquisition or investment; changes in the value of our assets; our financial
condition, performance and prospects; changes in projected inflation and interest rates; changes in general
conditions in the economy and the insurance industry; economic, financial, geopolitical, regulatory or judicial events
that affect us or the financial markets generally; changes in management; and adverse press or news
announcements. For the depositary shares representing our preferred shares, such factors could also include:
whether dividends have been declared on the preferred shares; whether the ratings on such depositary shares
provided by any ratings agency have changed; changes in our credit ratings; our total outstanding indebtedness; the
level, direction and volatility of market interest rates generally; and the market for similar securities.

Our ordinary shares have in the past been, and may continue to be, thinly traded, and significant sales could
adversely affect the market price for our ordinary shares and impair our ability to raise capital through offerings of
our equity securities.

Enstar Group Limited | 2022 Form 10-K

Table of Contents

ITEM 1A. | Risk Factors

A few significant shareholders may influence or control the direction of our business. If the ownership of
our ordinary shares continues to be highly concentrated, it may limit the ability of other shareholders to
influence significant corporate decisions.

The interests of certain significant shareholders, including those that may be affiliated with members of our Board of
Directors (our “Board”), may not be fully aligned with those of other shareholders, which could lead to a strategy that
is not in such other shareholders’ best interests. As of December 31, 2022, the Canadian Pension Plan Investment
Board (“CPPIB”), funds managed by Stone Point Capital LLC and its affiliates, Beck Mack & Oliver, and three of
Enstar's executive officers (collectively) directly beneficially owned 9.4%, 9.7%, 4.3% and 5.6%, respectively, of our
outstanding voting ordinary shares. CPPIB directly owns additional non-voting ordinary shares that, together with its
voting shares, represented an economic interest of 17.2% as of December 31, 2022. In addition, CPPIB Epsilon
Ontario Trust, an affiliate of CPPIB, is the general partner CPPIB Epsilon Ontario Limited Partnership, which
indirectly beneficially owns 4.6% of our outstanding voting ordinary shares. Although they do not act as a group,
these shareholders may exercise significant influence over matters requiring shareholder approval, and their
concentrated holdings may delay or deter possible changes in control of Enstar, which may reduce the market price
of our ordinary shares.

Some aspects of our corporate structure and certain regulatory limitations may discourage third-party
takeovers and other transactions or prevent the removal of our Board and management.

Some provisions of our bye-laws have the effect of making more difficult or discouraging unsolicited takeover bids
from third parties or preventing the removal of our current board of directors and management. For example, our
bye-laws contain restrictions on the ability of shareholders to (i) nominate persons to serve as directors, (ii) remove
directors, (iii) submit resolutions to a shareholder vote, and (iv) request special general meetings. Also, a merger or
amalgamation would have to be approved by three-fourths of our voting ordinary shares to take effect. In addition,
our Board may limit a shareholder’s exercise of voting rights or to register a transfer of ordinary shares where it
deems it necessary to do so to avoid adverse tax, legal or regulatory consequences. Our Board may also decline to
register a transfer of shares unless all applicable consents, authorizations, permissions or approvals of any
governmental body or agency in Bermuda and other applicable jurisdictions required to be obtained prior to such
transfer shall have been obtained. We also have the authority under our bye-laws to reasonably request information
from any shareholder for the purpose of determining whether a shareholder’s voting rights are to be limited pursuant
to the bye-laws, and if a shareholder is unable to do so, we may eliminate the shareholder’s voting rights.

Insurance laws and regulations in the jurisdictions in which our insurance or reinsurance subsidiaries operate
require prior notices or regulatory approval of changes in control of an insurer or its holding company. Different
jurisdictions define changes in control differently, and generally any purchaser of 10% or more of the vote or value of
our ordinary shares could become subject to regulation and be required to file certain notices and reports with the
applicable insurance authorities. These laws and the aspects of our corporate structure outlined above may
discourage potential acquisition proposals or prevent the removal of members of our Board and management and
may delay, deter or prevent a change in control of us. To the extent these provisions discourage takeover attempts,
they may deprive shareholders of opportunities to realize takeover premiums for their shares or may depress the
market price of the shares.

Bermuda Law differs from the laws in effect in the United States. Shareholders who own our shares may
have more difficulty protecting their interests than shareholders of a U.S. corporation.

We are organized under the laws of Bermuda, and as a result our shareholders may have more difficulty protecting
their interests than shareholders of a U.S corporation. For example:

•

class actions and derivative actions are generally not available to shareholders under Bermuda law;

under Bermuda law, only shareholders holding collectively 5% or more of our outstanding ordinary shares or
groups of shareholders numbering 100 or more are entitled to propose a resolution at our general meeting;

a substantial portion of our assets and certain of our directors and officers and their assets are located outside
of the United States and as a result investors may have difficulty (i) effecting service of process within the
United States or (ii) recovering against us or these directors and officers on judgments of U.S. courts;

no claim may be brought in Bermuda against us or our directors and officers for violations of U.S. federal
securities laws, as such laws do not have force of law in Bermuda;

Enstar Group Limited | 2022 Form 10-K

Table of Contents

ITEM 1A. | Risk Factors

•

there is no treaty in effect between the United States and Bermuda providing for the enforcement of judgments
of U.S. courts, and there are grounds upon which Bermuda courts may not enforce judgments of U.S. courts;
and

some remedies available under the laws of U.S. jurisdictions, including U.S. federal securities laws, may be
prohibited in Bermuda courts as contrary to Bermuda’s public policy.

Certain regulatory and other constraints may limit our ability to pay dividends on our securities, and
dividends on our preferred shares are non-cumulative.

We do not currently intend to pay a cash dividend on our ordinary shares. If our Board decided to commence a
dividend program in the future, we are subject to significant regulatory and other constraints that affect our ability to
pay dividends and make other distributions on our ordinary and preferred shares. For example, under the Bermuda
Companies Act, we may declare or pay a dividend or distribution out of contributed surplus only if we have
reasonable grounds to believe that we are, and would after the payment be, able to meet our liabilities as they
become due or that the realizable value of our assets would thereby not be less than our liabilities. In addition, as
described above under “Risks Relating to Liquidity and Capital Resources,” we are a holding company that is
dependent upon distributions from our operating subsidiaries for liquidity, which may not be available.

Dividends on our preferred shares are non-cumulative and payable only out of available funds under Bermuda law.
If our Board (or a duly authorized committee thereof) does not authorize and declare a dividend for any dividend
period, holders of our preferred shares and, in turn, the depositary shares representing preferred shares, would not
be entitled to receive any such dividend, and such unpaid dividend will not accrue and will not be payable at any
time. We will have no obligation to pay dividends for a dividend period on or after the dividend payment date for
such period if our Board has not declared such dividend before the related dividend payment date, whether or not
dividends are declared for any subsequent dividend period with respect to any outstanding preferred shares and/or
our ordinary shares.

Our ordinary and preferred shares are subordinate to our existing and future indebtedness and our ordinary
shares rank junior to our outstanding preferred shares.

Our preferred shares are equity interests and do not constitute indebtedness. As such, our preferred shares, in
addition to our ordinary shares, will rank junior to all of our indebtedness and other non-equity claims with respect to
assets available to satisfy our claims, including in our liquidation. Our preferred shares are also contractually
subordinated in right of payment to all obligations of our subsidiaries, including all existing and future policyholder
obligations of our subsidiaries. Additionally, neither our ordinary shares nor our preferred shares represent an
interest in any of our subsidiaries, and accordingly, are structurally subordinated to all obligations of our
subsidiaries. Further, in the event of our liquidation, winding up or dissolution, our ordinary shares rank junior to our
outstanding preferred shares. In such an event, there may not be sufficient assets remaining after payments to
holders of our outstanding preferred shares to ensure payments to holders of our ordinary shares.

There is no limitation on our issuance of securities that rank equally with or senior to the preferred shares.

We may issue, without limitation, (1) additional depositary shares representing additional preferred shares that
would form part of one of the series of depositary shares representing our outstanding preferred shares, and
(2) additional series of securities that rank equally with or senior to the outstanding preferred shares. The issuance
of additional preferred shares on par with or senior to the outstanding preferred shares would dilute the interests of
the holders of our preferred shares, and any issuance of preferred shares senior to our outstanding preferred
shares or of additional indebtedness could affect our ability to pay dividends on, redeem or pay the liquidation
preference on our preferred shares, or to make payments to holders of our ordinary shares from remaining assets of
the Company, in the event of a liquidation, dissolution or winding-up of Enstar.

The voting rights of holders of our preferred shares and, in turn, the depositary shares representing our
preferred shares are limited.

Holders of our outstanding preferred shares and, in turn, the depositary shares representing the preferred shares
have no voting rights with respect to matters that generally require the approval of voting shareholders. In addition,
if dividends on any of our outstanding preferred shares have not been declared or paid for the equivalent of six
dividend payments, whether or not for consecutive dividend periods, holders of the outstanding preferred shares
and, in turn, the depositary shares, will, subject to the terms and conditions contained in the certificates of
designation governing the preferred shares, be entitled to vote for the election of two additional directors to our
Board. The holders shall be divested of the foregoing voting rights if and when dividends for at least four dividend

Enstar Group Limited | 2022 Form 10-K

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ITEM 1A. | Risk Factors

periods, whether or not consecutive, following a nonpayment event have been paid in full (or declared and a sum
sufficient for such payment shall have been set aside). In addition, holders of the depositary shares must act
through the depositary to exercise any voting rights in respect of the preferred shares. Although each depositary
share is entitled to 1/1,000th of a vote, the depositary can vote only whole preferred shares. While the depositary
will vote the maximum number of whole preferred shares in accordance with the instructions it receives, any
remaining votes of holders of the depositary shares will not be voted.

We have no obligation to maintain any listing of the depositary shares representing our outstanding
preferred shares.

Although the depositary shares representing our outstanding preferred shares are listed on NASDAQ, such listings
may not provide significant liquidity, and transaction costs in any secondary market could be high. The difference
between bid and ask prices in any secondary market could be substantial. As a result, holders of depositary shares
representing our preferred shares (which do not have a maturity date) may be required to bear the financial risks of
an investment in the depositary shares representing preferred shares for an indefinite period. In addition, we
undertake no obligation, and expressly disclaim any obligation, to maintain the listing of the depositary shares
representing our preferred shares on NASDAQ or any other stock exchange. If we elect to discontinue the listing at
any time or the depositary shares representing the preferred shares otherwise are not listed on an applicable stock
exchange, the dividends paid after the delisting would not constitute qualified dividend income for U.S. federal
income tax purposes (as dividends paid by a Bermuda corporation are qualified dividend income only if the stock
with respect to which the dividends are paid is readily tradable on an established securities market in the United
States).

A classification of the depositary shares representing our preferred shares by the National Association of
Insurance Commissioners may impact U.S. insurance companies that purchase our preferred shares.

The NAIC may, in its discretion, classify securities in U.S. insurers’ portfolios as debt, preferred equity or common
equity instruments. The NAIC’s written guidelines for classifying securities as debt, preferred equity or common
equity include subjective factors that require the relevant NAIC examiner to exercise substantial judgment. There is
therefore a risk that the depositary shares representing our preferred shares may be classified by the NAIC as
common equity instead of preferred equity. The NAIC classification determines the amount of risk-based capital
(“RBC”) charges incurred by insurance companies in connection with an investment in a security. Securities
classified as common equity by the NAIC carry RBC charges that can be significantly higher than the RBC
requirement for debt or preferred equity. Therefore, any classification of the depositary shares representing our
preferred shares as common equity may adversely affect U.S. insurance companies that hold depositary shares
representing our preferred shares. In addition, a determination by the NAIC to classify the depositary shares
representing our preferred shares as common equity may adversely impact the trading of the depositary shares
representing our preferred shares in the secondary market.

Our preferred shares are subject to our rights of redemption.

Our preferred shares are redeemable pursuant to the terms set forth in the certificate of designations governing
such series. Whenever we redeem preferred shares held by the depositary, the depositary will, as of the same
redemption date, redeem the number of depositary shares representing preferred shares so redeemed. We have no
obligation to redeem or repurchase the preferred shares under any circumstances. If the preferred shares are
redeemed by us, you may not be able to reinvest the redemption proceeds in a comparable security at a similar
return on your investment.

Enstar Group Limited | 2022 Form 10-K

Table of Contents

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

We renew and enter into new leases in the ordinary course of our business. We lease office space in Hamilton,
Bermuda, where our principal executive office is located. We also lease office space in a number of U.S. states, the
United Kingdom, Australia and several Continental European countries. We believe that this office space is sufficient
for us to conduct our current operations for the foreseeable future, although in connection with future acquisitions
from time to time, we may expand to different locations or increase space to support any such growth.

ITEM 3. LEGAL PROCEEDINGS

For a discussion of legal proceedings, see Note 25 in the notes to our consolidated financial statements, which is
incorporated herein by reference.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

Enstar Group Limited | 2022 Form 10-K

Table of Contents

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY
SECURITIES

Market Information and Number of Holders

Our ordinary voting shares are listed on the NASDAQ Global Select Market under the symbol "ESGR." There is no
established trading market for our non-voting ordinary shares. On February 27, 2023, there were 1,196
shareholders of record of our voting ordinary shares and one shareholder of record of our non-voting ordinary
shares. This is not the number of beneficial owners of our voting ordinary shares as some shares are held in “street
name” by brokers and others on behalf of individual owners.
Dividend Information

Historically, we have not declared a dividend on our ordinary shares. Our strategy is to retain earnings and invest
distributions from our operating subsidiaries into our business. However, we may re-evaluate this strategy from time
to time based on overall market conditions and other factors. Any payment of dividends must be approved by our
Board. Furthermore, our ability to pay dividends is subject to certain restrictions.3,4
Issuer Purchases of Equity Securities

The following table provides information about ordinary shares acquired by the Company during the three months
ended December 31, 2022.

Period

Total Number of
Shares Purchased

Average Price
Paid per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (1)

Maximum Number (or
Dollar Value) of Shares
that May Yet be
Purchased Under the
Program(1)

(in millions of U.S.
dollars)

Beginning dollar amount available to be
repurchased

October 1, 2022 - October 31, 2022

November 1, 2022 - November 30, 2022

December 1, 2022 - December 31, 2022

— $

—

— $

—

(1) In May 2022, our Board authorized the repurchase of up to $200 million of our ordinary shares (the “2022 Repurchase Program”), which is

effective through May 5, 2023. As of December 31, 2022, the remaining capacity under the 2022 Repurchase Program was $95 million.

3 Described in Note 24 to our consolidated financial statements, which is incorporated herein by reference.
4
For information on dividends on our preferred shares refer to Note 19 to our consolidated financial statements.

Enstar Group Limited | 2022 Form 10-K

Item 5 | Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Table of Contents

Performance Graph

The following performance graph compares the cumulative total return on our ordinary shares with the cumulative
total return on the S&P 500 Index and the S&P Property & Casualty Insurance Index for the period that commenced
December 31, 2017 and ended on December 31, 2022.

The performance graph shows the value as of December 31 of each calendar year of $100 invested on December
31, 2017 in our ordinary shares, and the indices listed above, assuming the reinvestment of dividends. Returns
have been weighted to reflect relative market capitalization. This information is not necessarily indicative of future
returns.

Enstar (1)

S&P 500 Index (1)

Indexed Returns (2) for Years Ended December 31,

2017

2018

2019

2020

2021

2022

100.00

83.47

103.04

102.06

123.33

115.09

100.00

95.62

125.72

148.85

191.58

156.88

S&P Property & Casualty Index (1)

100.00

95.31

119.97

128.31

153.05

181.93

(1) Source: S&P Global Market Intelligence
(2) $100 invested on December 31, 2017 in stock or index, including reinvestment of dividends.

Enstar Group Limited | 2022 Form 10-K

Comparison of 5 Year Cumulative Total ReturnEnstar (1)S&P 500 Index (1)S&P Property & Casualty Index (1)201720182019202020212022$75$100$125$150$175$200$225$250

Table of Contents

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in
conjunction with our consolidated financial statements and the related notes included elsewhere in this annual
report.

Some of the information contained in this discussion and analysis or included elsewhere in this annual report,
including information with respect to our plans and strategy for our business, includes forward-looking statements
that involve risks, uncertainties and assumptions. Our actual results and the timing of events could differ materially
from those anticipated by these forward-looking statements as a result of many factors, including those discussed
under "Cautionary Statement Regarding Forward-Looking Statements", "Item 1A. Risk Factors" and elsewhere in
this annual report.

Table of Contents

•

Section
Operational Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Results of Operations — for the Years Ended December 31, 2022, 2021 and 2020 . . . .
Underwriting Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Investment Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
• General and Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Key Performance Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Results of Operations by Segment — for the Years Ended December 31, 2022, 2021 and 2020 . . . . .
Run-off Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assumed Life Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legacy Underwriting Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Critical Accounting Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

•

Page

45
47

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Operational Highlights

Table of Contents

Operational Highlights

Our consolidated results for the year ended December 31, 2022 reflect our continued progress on providing capital
release solutions to our clients by acquiring and managing their run-off portfolios.

During 2022 we:

Assumed $3.9 billion of Loss Reserves from Run-off Transactions, including $3.1 billion
from Aspen

•

In May 2022, we completed a loss portfolio transfer (“LPT”) transaction with Aspen Insurance Holdings Limited
(“Aspen”) with respect to $3.1 billion of net loss reserves, subject to a limit of $3.6 billion. Our existing ADC with
Aspen, which had acquired reserves of $782 million and closed in June 2020, was absorbed into this LPT.

As a result of this LPT transaction, we assumed an incremental $1.9 billion of net loss reserves with a diverse
mix of property, liability and specialty lines of business, in exchange for incremental premium of $1.8 billion5,
and assumed claims control.

In August 2022, we closed a LPT transaction with Probitas Managing Agency Limited (“Probitas”) and assumed
$61 million of net loss reserves with respect to the 2018 and prior year of account exposures of Probitas’
managed Syndicate 1492 which cover general liability and financial risks underwritten worldwide. The LPT
converted into a reinsurance to close (“RITC”) effective January 1, 2023 following regulatory approvals.

In November 2022, we closed a LPT transaction with a wholly owned subsidiary of Argo Group International
Holdings, Ltd. (“Argo”) covering a number of its direct U.S. casualty insurance portfolios, including construction,
for accident years 2011 to 2019.

At closing, we assumed $718 million of Argo’s net loss reserves in exchange for premium of $631 million, and
recorded $93 million of DCA.

Substantially Completed the Unwind of Enhanzed Re’s Reinsurance Transactions

•

In June 2022, Enhanzed Re paid a $200 million dividend, of which $150 million was retained by the Company,
and $50 million was paid to Allianz SE (“Allianz”) in respect of its ownership interest in Enhanzed Re.

Following the completion of our strategic review of Enhanzed Re earlier this year, in August 2022, we entered
into a Master Agreement with Allianz through which we agreed to a series of transactions6 that allowed us to
unwind the Enhanzed Re reinsurance transactions in an orderly manner.

Enhanzed Re completed and recognized the following transactions during the year ended December 31, 2022:

◦

Commuted the catastrophe reinsurance business with Allianz, resulting in the recognition of a favorable
commutation gain of $59 million; and

Repaid the $70 million, in aggregate principal, of subordinated notes issued by Enhanzed Re to an affiliate
of Allianz.

In November 2022, Enhanzed Re completed a novation of the reinsurance closed block of life annuity policies
to Monument Re Limited (“Monument Re”). We settled the life liabilities and the related assets at carrying value
in return for cash consideration as of the closing date. As at September 30, 2022, the carrying value of the life
liabilities and related assets was $1.2 billion and $980 million, respectively, which would be recorded as
$328 million7 of other income if measured as of this date.

◦ Our net earnings attributable to Enstar will be reduced by the amount attributable to Allianz’s 24.9%
noncontrolling interest in Enhanzed Re at the time of the transaction and a portion of our other income
recorded will be subject to deferral over the expected settlement period for the life annuity policies to

5 Refer to “New Business” section for further details.
6 Refer to Note 1 to our consolidated financial statements for further details.
7The $328 million of other income will consist of the gain or loss on the novation transaction and the impact of the realization of AOCI relating to
the adoption of the LDTI standard which was retrospectively applied as of the January 1, 2023 adoption date. Refer to Note 2 to our
consolidated financial statements for further details.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Operational Highlights

Table of Contents

account for our pre-existing 20% ownership interest in Monument Re, resulting in an expected overall
increase in our first quarter 2023 net earnings of $197 million from the novation.

◦

Activity for the period from October 1, 2022 to November 7, 2022 will impact the amount of other income
and net earnings recorded.

• On December 28, 2022, Enhanzed Re repurchased the entire 24.9% ownership interest Allianz held in
Enhanzed Re for $174 million. The purchase price will be subject to a post-closing adjustment based on the
final net book value of Enhanzed Re as of December 31, 2022. Following the completion of this transaction,
Enhanzed Re became a wholly-owned subsidiary of Enstar.

•

The final impact of the novation and the share repurchase will be reflected in our first quarter 2023 results, as
we report the results of Enhanzed Re on a one quarter reporting lag.

Executed Capital Transactions

• We completed a $500 million junior subordinated notes offering in January 2022, the net proceeds of which
were primarily used to fund the payment at maturity of the outstanding $280 million aggregate principal amount
of our senior notes, which matured in March 2022.

• We repurchased 697,580 voting ordinary shares during the year ended December 31, 2022 for an aggregate
$163 million, representing an average price per share of $233.92. During the year ended December 31, 2022,
we utilized $105 million of the $200 million authorized under the 2022 Repurchase Program and the remaining
$59 million authorized under the 2021 Repurchase Program to repurchase our ordinary shares. There were no
share repurchases during the three months ended December 31, 2022.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Consolidated Results of Operations

Table of Contents

Consolidated Results of Operations - For the Years Ended December 31, 2022, 2021 and 2020

Primary GAAP Financial Measures

We use the following GAAP measures to manage the company and monitor our performance:

•

Net earnings and net earnings attributable to Enstar ordinary shareholders, which collectively provide a
measure of our performance focusing on underwriting, investment and expense results;

Comprehensive income attributable to Enstar, which provides a measure of the total return, including unrealized
investment gains and losses on investments, as well as other elements of other comprehensive income;

Book value per share (“BVPS”), which we use to measure the value of our company over time;

Return on equity (“ROE”), which measures our profitability by dividing our earnings attributable to the company
by our shareholders’ equity;

Total investment return (“TIR”), which measures the rate of return we obtain, both realized and unrealized, on
our investments; and

Run-off liability earnings (“RLE”) and RLE %, which measure both the dollar amount of prior period development
we achieve on managing our acquired portfolios (RLE) and the percentage rate of return we obtain on
managing our run-off liabilities by dividing our prior period net incurred losses and LAE by our average net loss
reserves (RLE %).

We amended our calculation of TIR to include the unrealized gains (losses), net of reclassification adjustments and
excluding foreign exchange on our AFS securities, included within other comprehensive income (“OCI”). We believe
this represents a better measure of “total” investment return, and eliminates the discrepancy between the numerator
and denominator, whereby the fair value of AFS securities includes any unrealized gains (losses) in AOCI. The
change in the calculation was applied to all periods presented herein.

Effective December 31, 2022, we voluntarily changed our accounting policy for calculating the amortization of our
DCAs and retrospectively applied this change to all applicable prior period financial statement information. As of
January 1, 2020, the cumulative effect of this change resulted in a $158 million increase to retained earnings. The
favorable impacts to net earnings for the years ended December 31, 2022, 2021 and 2020 were $163 million, $65
million and $4 million, respectively.

We regard DCA as an adjustment to the liabilities that we acquire and record at book value. As a result, DCA
reflects the time value of money difference between the premium received and liabilities recorded. As a result of the
change:

• We no longer adjust DCA amortization as if any change in ultimates losses were known on inception; and

• We have removed DCA amortization from our measures of RLE and RLE % as we now view DCA as a
separate overall cost of the acquisition of the contract. The change in the calculation was applied to all prior
periods presented herein.

Further information on this change in accounting principle can be found in Note 2 and Note 9 to our consolidated
financial statements.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Consolidated Results of Operations

Table of Contents

The following table sets forth certain consolidated financial information for the years ended December 31, 2022,
2021 and 2020:

Year Ended December 31,

2022

2021

$ / pp
Change

2020

$ / pp
Change

(in millions of U.S. dollars)

245

(179)

572

(327)

Underwriting Results

Net premiums earned

Net incurred losses and LAE

Current period

Prior Period

Total net incurred losses and LAE

Policyholder benefit expenses

Amortization of net deferred charge assets

Acquisition costs

Investment Results

Net investment income

Net realized (losses) gains

Net unrealized (losses) gains

(Loss) earnings from equity method investments

General and administrative expenses

NET (LOSS) EARNINGS

NET (LOSS) EARNINGS ATTRIBUTABLE TO
ENSTAR ORDINARY SHAREHOLDERS

COMPREHENSIVE (LOSS) INCOME
ATTRIBUTABLE TO ENSTAR

GAAP measures:

(756)

(708)

455

(135)

(1,479)

(74)

331

(945)

172

(403)

(231)

(3)

312

(61)

178

367

553

(906)

502

(1,408)

(1,429)

440

(1,869)

(124)

(353)

(477)

(34)

143

(74)

(1,657)

(167)

(36)

(1,498)

405

(32)

373

—

171

303

(233)

(371)

(604)

(3)

(114)

(80)

1,623

(1,445)

239

502

(146)

(135)

1,731

(1,178)

1,723

(1,221)

1,832

(1,392)

BVPS

ROE

RLE %

TIR %

Non-GAAP measures:

Adjusted BVPS*

Adjusted ROE*

Adjusted RLE % *

Adjusted TIR %*

246.20

329.20

(83.00)

293.97

35.23

(15.6) %

6.3 %

(9.0) %

7.9 %

(23.5) pp

38.4 %

(30.5) pp

3.9 %

2.4 pp

0.4 %

3.5 pp

2.0 %

(11.0) pp

14.6 %

(12.6) pp

243.09

323.43

(80.34)

288.56

34.87

(1.1) %

3.9 %

(0.2) %

10.1 %

(11.2) pp

41.9 %

(31.8) pp

3.6 %

0.3 pp

(3.8) pp

3.5 %

0.1 pp

12.4 %

(8.8) pp

pp - Percentage point(s)
*Non-GAAP measure; refer to "Non-GAAP Financial Measures" section for reconciliation to the applicable GAAP financial measure.

Overall Results

Year Ended December 31, 2022 versus 2021:

Net loss attributable to Enstar ordinary shareholders was $906 million for the year ended December 31, 2022, which
compares to net income of $502 million from 2021, as a result of:

•

Negative investment results (sum of net investment income, net realized (losses) gains, net unrealized (losses)
gains and (loss) earnings for equity method investments) of $1.2 billion compared to favorable investment
results of $522 million for the year ended December 31, 2021, primarily driven by:

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Consolidated Results of Operations

Table of Contents

◦

Net realized and unrealized losses of $1.6 billion, primarily related to fixed income assets, for the year
ended December 31, 2022, compared to net gains of $117 million for the year ended December 31, 2021.
Rising interest rates across U.S., U.K. and European markets, in addition to widening investment grade
credit spreads led to the net losses on our fixed income securities, and global equity market declines and
widening high yield and leveraged loan credit spreads led to the net losses on our other investments,
including equities.

Losses from equity method investments of $74 million compared to earnings of $93 million for the year
ended December 31, 2021 further contributed to the decrease in our earned investment returns, primarily
as a result of recognizing a $52 million other-than-temporary impairment relating to the carrying value of
one of our equity method investments and consolidating Enhanzed Re effective September 1, 2021. Prior to
that date, the results of Enhanzed Re were recorded in earnings from equity method investments within the
Investments segment. Our earnings relating to Enhanzed Re prior to the consolidation in 2021 were $82
million.

This was partially offset by an increase in net investment income of $143 million due to investment of new
premium, reinvestment of maturing investments at higher yields and fixed income securities with floating
rates which reset at higher rates of interest income.

A net gain on purchase and sales of subsidiaries of $73 million in 2021, primarily driven by the bargain purchase
gain recognized on the step acquisition of Enhanzed Re and a net gain on sales of subsidiaries of $26 million.

Lower net earned premiums of $179 million, partially due to placing our Starstone International business into
run-off in mid-2020.

•

This was partially offset by:

•

Reduced total expenses of $477 million as a result of the combination of:

◦

Reductions of $124 million in current period net incurred losses and LAE and $34 million in acquisition costs
as a result of largely exiting or placing into run-off our active underwriting platforms, including StarStone
International;

An increase in favorable development in net incurred losses and LAE for prior periods of $353 million,
primarily driven by a change in fair value of our 2017 and 2018 portfolios where we elected the fair value
option and reductions in estimates of net ultimate losses. This resulted in RLE of 6.3% in 2022 in
comparison to RLE of 3.9% in 2021; in addition to

A reduction of $36 million in general and administrative expenses primarily driven by reductions to long-term
incentive plan costs and a decrease in IT costs as a result of reduced project activity, partially offset by the
absence of a proportional reduction in accrued performance-based costs which were recorded in the
comparative period.

The above factors contributed to our 2022 net loss of $945 million as compared to 2021 net earnings of $553
million.

Comprehensive loss attributable to Enstar was $1.4 billion for the year ended December 31, 2022, as compared to
comprehensive income of $440 million for the year ended December 31, 2021. The variance was primarily due to
an increase in unrealized losses on our fixed income securities, AFS, as a result of rising interest rates. The
unrealized losses on our fixed income securities, AFS, combined with our investment results, contributed to an
unfavorable TIR of (9.0)% in 2022, in comparison to a TIR of 2.0% in 2021.

BVPS decreased by 25.2% primarily as a result of comprehensive loss attributable to Enstar of $1.4 billion.

As a result of the current period net loss and comprehensive loss attributable to Enstar described above, our ROE
decreased by 23.5 pp.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Consolidated Results of Operations

Table of Contents

Year Ended December 31, 2021 versus 2020:

Net earnings attributable to Enstar ordinary shareholders decreased by $1.2 billion from $1.7 billion in 2020 to $502
million in 2021, as a result of:

•

Reduced investment results of $1.7 billion, driven by significant outperformance by our investments in 2020,
during which period we had net unrealized gains of $1.6 billion not repeated in 2021. In 2021, we redeemed and
liquidated the InRe Fund, which provided $1.2 billion of unrealized gains in 2020, and our other investments,
including equities, were impacted by reduced U.S. and Chinese equity market returns combined with rising
interest rates.

Lower net premiums earned of $327 million, primarily relating to our legacy underwriting business which we
exited in 2020. In 2021, we continued to earn premium from our Run-off segment relating to our AmTrust RITC
transactions and StarStone International business, which was put into run-off effective June 2020 and
transferred to the Run-off segment effective January 1, 2021.

Decreased other income of $98 million, primarily from reduced favorable experience with our defendant A&E
liabilities.

This was partially offset by:

•

The net gain on purchase and sales of subsidiaries of $73 million, which was driven by a bargain purchase gain
associated with our step acquisition of Enhanzed Re.

Reduced total expenses of $858 million as a result of the combination of:

◦

the exit of our legacy underwriting businesses resulting in a reduction of $349 million in current period net
incurred losses and LAE, $138 million in acquisition costs and $148 million in general and administrative
costs within the Legacy Underwriting segment; in addition to

an increase in favorable development in net incurred losses and LAE of $371 million, primarily driven by a
change in fair value of our 2017 and 2018 portfolios where we elected the fair value option. This improved
our RLE to 3.9% in 2021 compared to 0.4% in 2020.

The reductions in income and operating expenses described above resulted in a $1.2 billion decrease in net
earnings from $1.7 billion to $553 million.

Comprehensive income attributable to Enstar decreased by $1.4 billion from $1.8 billion in 2020 to $440 million in
2021 due an increase in unrealized losses on our fixed income securities, AFS as a result of rising interest rates.
The unrealized losses on our fixed income securities, AFS, combined with the unfavorable movement in our
investment results, contributed to our TIR of 2.0% for 2021 which was significantly lower than our TIR of 14.6% for
2020.

BVPS increased by 12.0% as a result of repurchasing 18.6% of our ordinary shares at a 24.0% discount to book
value, combined with comprehensive income attributable to Enstar of $440 million for 2021.

Overall, our ROE decreased by 30.5 pp.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

Overall Measures of Performance

BVPS and Adjusted BVPS*

ROE and Adjusted ROE*

BVPS and Adjusted BVPS* decreased by 25.2% and 24.8%,
respectively, from December 31, 2021 to December 31, 2022,
primarily due to realized and unrealized investment losses of
$1.8 billion (recorded through the income statement and other
comprehensive income) for the year ended December 31,
2022.

2022 versus 2021

ROE decreased by 23.5 pp primarily due to the components in the following diagram:

Adjusted ROE* decreased by 11.2 pp, as it excludes the impact of net realized and unrealized losses on fixed
income securities.

*Non-GAAP measure; refer to "Non-GAAP Financial Measures" section for reconciliation to the applicable GAAP financial measure.

Enstar Group Limited | 2022 Form 10-K

$246.20$243.09$329.20$323.4320222021Book Value Per Ordinary Share("BVPS")Adjusted Book Value Per Ordinary Share("Adjusted BVPS")*(15.6)%(1.1)%7.9%10.1%38.4%41.9%202220212020Return on Equity("ROE")Adjusted Return on Equity("Adjusted ROE")*7.9%(17.0) pp(12.6) pp2.9 pp6.6 pp(3.4) pp(15.6)%2021Net realized and unrealized losses on fixed income assetsNet realized and unrealized losses on other investments, including equitiesNet investment incomePPDOther2022

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

2021 versus 2020

ROE decreased by 30.5 pp primarily due to the components in the following diagram:

Adjusted ROE* decreased by 31.8 pp, as the impact of excluding the favorable change in the interest rate
components of the valuation of liabilities for which we have elected the fair value option offset the exclusion of the
unfavorable impact of net realized and unrealized losses on fixed income securities.

*Non-GAAP measure; refer to "Non-GAAP Financial Measures" section for reconciliation to the applicable GAAP financial measure.

We discuss the results of our operations by aggregating certain captions from our consolidated statements of
earnings, as we believe it provides a more meaningful view of our results and eliminates repetition that would arise
if captions were discussed on an individual basis.

In order to facilitate discussion, we have grouped the following captions:

•

Underwriting results: includes net premiums earned, net incurred losses and LAE, policyholder benefit
expenses and acquisition costs.

Investment results: includes net investment income, net realized (losses) gains, net unrealized (losses) gains
(recorded through the income statement and other comprehensive income) and (losses) earnings from equity
method investments.

• General and administrative results: includes general and administrative expenses.

Enstar Group Limited | 2022 Form 10-K

38.4%(10.1) pp(24.6) pp(3.9) pp(5.4) pp7.1pp6.4pp7.9%2020Net realized and unrealized losses on fixed income assetsNet realized and unrealized gains on other investments, including equitiesEarnings from equity method investmentsGeneral and administrative expensesPPDOther2021

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

Underwriting Results

Our strategy is focused on effectively managing (re)insurance portfolios underwritten in previous years that we
assume through our provision of capital release solutions and acquisition of portfolios and businesses in run-off.

Although we have largely exited our active underwriting platforms, we still record net premiums earned and the
associated current period net incurred losses and LAE and acquisition costs as a result of the run-off of unearned
premiums from transactions completed in recent years.

Premiums earned in the Run-off segment are generally offset by the related current period net incurred losses and
LAE and acquisition costs.

The components of underwriting results for the years ended December 31, 2022, 2021 and 2020 are as follows:

2022

2021

Run-off

Assumed
Life

Legacy
Underwriting

Corporate
and other

Total Run-off

Assumed
Life

Legacy
Underwriting

Corporate
and other

Total

(in millions of U.S. dollars)

40 $

17 $

9 $

— $ 66 $ 182 $

5 $

58 $

— $ 245

Net premiums
earned

Net incurred losses
and LAE:

Current period

—

Prior periods

(486)

(55)

Total net incurred
losses and LAE

Policyholder benefit
expenses

Acquisition costs

Underwriting
results

(442)

(55)

—

144

(218)

(756)

(338)

(218)

(708)

(194)

—

(4)

—

172

(6)

(59)

(403)

—

(59)

(231)

—

(3)

$ 460 $

47 $

1 $

218 $ 726 $ 332 $

7 $

25 $

58 $ 422

Net premiums earned

Net incurred losses and LAE:

Current period

Prior periods

Total net incurred losses and LAE

Acquisition costs

Underwriting results

2020

Run-off

Legacy
Underwriting

Corporate and
other

Total

59 $

513 $

— $

(in millions of U.S. dollars)

(175)

(145)

375

(4)

371

151

184 $

(9) $

—

147

— $

(147) $

572

405

(32)

373

171

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

Current Period

The current period underwriting results from our (re)insurance operations include net earned premiums that have
been declining as a result of our transition away from active underwriting activities.

The reductions in net premiums earned and current period net incurred losses and LAE were driven by reduced
levels of activity arising from our exit of our active underwriting platforms beginning in 2020.

For the year ended December 31, 2022, we earned premium from our StarStone International business and from
our Assumed Life segment. In comparison, our 2021 and 2020 earned premium was primarily driven by StarStone
International and AmTrust RITC business, which was entered into in 2019.

Prior Periods - RLE

The following tables summarize RLE, RLE %, Adjusted RLE* and Adjusted RLE %* by acquisition year for the years
ended December 31, 2022, 2021 and 2020, which management believes is useful in measuring and monitoring
performance of our claims management activity on the portfolios that we have acquired. This permits comparability
between acquisition years of different loss reserve volumes.

Refer to the table below for a summary of RLE and Adjusted RLE* for the year ended December 31, 2022:

RLE

2022

Acquisition Year

RLE / PPD

Average net
loss reserves

RLE %

Adjusted
RLE / PPD*

(in millions of U.S. dollars)

Adjusted RLE*

Average
adjusted net
loss reserves*

Adj RLE*
%

2012 and prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Total

15 $

(1)

183

(120)

435

549

186

765

312

731

745

913

1,156

719

3,861

2,032

2.7 % $

(0.5) %

3.9 %

3.8 %

1.9 %

24.6 %

6.4 %

5.1 %

(16.7) %

11.3 %

27 $

(120)

356

615

319

808

905

985

1,685

720

4,443

2,033

4.4 %

4.9 %

18.3 %

4.1 %

2.7 %

3.3 %

1.9 %

3.2 %

(16.7) %

8.0 %

756 $

11,969

6.3 % $

489 $

12,636

3.9 %

Enstar Group Limited | 2022 Form 10-K

(in millions of U.S. dollars)$71$229$576$66$245$572$23$57$171$48$172$405Net premiums earnedAcquisition costsCurrent period net incurred losses and LAE202220222021202120202020

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

2022:

Our RLE % was positively impacted by a net reduction in estimates of net ultimate losses of $403 million, a
reduction of $200 million in the fair value of liabilities for which we have elected the fair value option and a $135
million reduction in provisions for ULAE.

We recorded:

Favorable RLE of $160 million in acquisition years 2019 and 2021 on our ADC contracts where our cedants have
experienced continued favorable ground-up performance.

Favorable RLE in the 2017 acquisition year was driven predominantly by a reduction in the fair value of liabilities for
which we have elected the fair value option.

Favorable RLE in the 2018 acquisition year was driven by favorable claims activity from major claims reviews on our
professional indemnity/directors and officers and marine, aviation and transit lines of business for our Lloyd’s
syndicate books combined with a reduction in the fair value of liabilities where we have elected the fair value option.

Favorable RLE in the 2019 acquisition year was driven by continued favorable experience in an ADC contract.

Unfavorable RLE in the 2020 acquisition year was adversely impacted by general casualty liabilities where we
experienced additional claim reporting latency and unexpected increased severity on a small number of large New
York Labor Law claims, which resulted in increased overall ultimate loss estimates on one portfolio. In addition, we
experienced higher than expected claims severity, primarily on older liabilities, and slower than expected claim
settlement rates related to our ride share motor portfolio. This was partially offset by favorable development on other
portfolios.

Favorable RLE in the 2021 acquisition year was driven by continued favorable experience in our workers’
compensation portfolios, which benefited from lower severity trends on certain existing claims, reduced levels of
expected frequency of claims for excess workers’ compensation risks, favorable claim settlements, and accelerated
and favorable claim settlement patterns on certain portfolios. In addition, we recorded favorable development on an
ADC contract where the cedants have experienced continued favorable ground-up performance. We also recorded
favorable claim activity on the Assumed Life segment catastrophe book, combined with the recognition of a gain on
commutation of the catastrophe reinsurance business of $59 million.

Favorable RLE in the 2022 acquisition year was primarily driven by a portfolio where our initial estimate of claims
handling costs (or ULAE) were reduced, as we achieved better than expected current and future cost economies of
scale on this transaction.

Our Adjusted RLE %* was positively impacted by the net reduction in estimates of net ultimate losses relating to the
Run-off segment, as described above. It excludes the impact of the changes in the discount rate upon the fair value
of liabilities where we have elected the fair value option and the amortization of fair value adjustments relating to
purchased subsidiaries.

*Non-GAAP measure; refer to "Non-GAAP Financial Measures" section for reconciliation to the applicable GAAP financial measure.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

Refer to the table below for a summary of RLE and Adjusted RLE* for the year ended December 31, 2021:

RLE

2021

Acquisition Year

RLE / PPD

Average net
loss reserves

RLE %

Adjusted
RLE / PPD*

Adjusted RLE*

Average
adjusted net
loss reserves*

Adjusted
RLE* %

2012 and prior

34 $

2013

2014

2015

2016

2017

2018

2019

2020

2021

Total

(in millions of U.S. dollars)

6.1 % $

39 $

6.8 %

2.6 %

5.7 %

1.2 %

8.8 %

3.7 %

3.6 %

(1.5) %

7.0 %

(27)

142

558

133

945

370

815

1,006

1,208

1,320

1,845

2,144

633

102

378

894

1,069

1,237

1,871

1,845

2,368

(27)

150

6.2 %

5.2 %

29.4 %

5.8 %

0.9 %

3.2 %

3.1 %

4.9 %

(1.5) %

6.0 %

3.6 %

403 $

10,344

3.9 % $

381 $

10,455

2021:

Overall, RLE % and Adjusted RLE* % were primarily driven by net favorable actual claims experience compared
with our expected claims trends. This was notable in the 2012 and prior, 2017 and 2018 acquisition years.

RLE was positively impacted by a net reduction in estimates of net ultimate losses of $281 million, a reduction of
$75 million in the fair value of liabilities for which we have elected the fair value option and a $63 million reduction in
provisions for ULAE.

Adjusted RLE* excludes the impact of the changes in the discount rate upon the fair value of liabilities where we
have elected the fair value option, the impact of changes in ULAE and the amortization of fair value adjustments
relating to purchased subsidiaries.

Other notable events within our acquisition years were:

Adjusted RLE* for our 2019 acquisition year had lower than expected asbestos related claim frequency related to
our defendant A&E liabilities. RLE and RLE % does not include the impact of changes to our defendant A&E
liabilities.

Our 2020 acquisition year had adverse development on our motor book offset by favorable development in other
portfolios relating to the 2018 and 2019 accident years.

Acquisition year 2021 experienced favorable claim activity in our professional indemnity/directors and officers and
motor lines of business relative to expectations at take-on.

*Non-GAAP measure; refer to "Non-GAAP Financial Measures" section for reconciliation to the applicable GAAP financial measure.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

Refer to the table below for a summary of RLE and Adjusted RLE* for the year ended December 31, 2020:

2020

RLE

Acquisition Year

RLE / PPD

Average net
loss reserves

RLE %

Adjusted
RLE / PPD*

Adjusted RLE*

Average
adjusted net
loss reserves*

Adjusted
RLE* %

2012 and prior

2013

2014

2015

2016

2017

2018

2019

2020

Total

44 $

16 $

(50)

(71)

32 $

674

174

1,064

451

915

1,108

1,459

1,495

1,011

8,351

(in millions of U.S. dollars)

6.5 % $

51 $

9.2 %

0.1 %

4.4 %

2.3 %

(4.5) %

1.2 %

2.2 %

(7.0) %

0.4 % $

130

(71)

287 $

756

111

463

999

1,178

1,504

2,034

1,011

8,129

6.7 %

12.3 %

2.7 %

4.5 %

3.6 %

3.3 %

4.6 %

6.4 %

(7.0) %

3.5 %

2020:

Overall, RLE % and Adjusted RLE* % were primarily driven by a mix of favorable and unfavorable actual claims
experience compared with our expected claims trends. Our experience was notably favorable in our 2012 and prior,
2016, 2017 and 2018 acquisition years, offset by adverse development in our 2020 acquisition year as detailed
below.

RLE was adversely impacted by an increase of $119 million in 2020 relating to the change in the discount rate
component of the fair value of liabilities for which we have elected the fair value option in the 2017 and 2018
acquisition years as a result of decreases in interest rates, which was offset by a net reduction in estimates of net
ultimate losses of $130 million and a $49 million reduction in provisions for ULAE.

Other notable events within our acquisition years were:

Adjusted RLE* for our 2016 and 2019 acquisition years were favorably impacted by lower than expected asbestos
related claim frequency related to our defendant A&E liabilities. RLE and RLE % does not include the impact of
changes to our defendant A&E liabilities.

Our 2017 and 2018 acquisition years had favorable development on losses relating primarily to older accident years
on asbestos related claims and reduced asbestos related claim frequency, partially offset by the adverse impact on
RLE % of changes in the discount rate component of the fair value of liabilities for which we have elected the fair
value option.

Our 2020 acquisition year was driven by adverse development on the motor book, offset by favorable development
in other portfolios relating to older accident years.

*Non-GAAP measure; refer to "Non-GAAP Financial Measures" section for reconciliation to the applicable GAAP financial measure.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

Investment Results

We strive to structure our investment holdings and the duration of our investments in a manner that recognizes our
liquidity needs, including our obligation to pay losses and future policyholder benefit expenses.

The components of our investment results split between our fixed income assets (which includes our short-term and
fixed maturity investments classified as trading and AFS, funds held-directly managed, cash and cash equivalents,
including restricted cash and cash equivalents, and funds held by reinsured companies, collectively our “Fixed
Income” assets) and other investments (which includes equities and equity method investments, collectively our
“Other Investments”) for the years ended December 31, 2022, 2021 and 2020 are as follows:

2022

2021

2020

Fixed
Income

Other
Investments

Total

Fixed
Income

Other
Investments

Total

Fixed
Income

Other
Investments

Total

(in millions of U.S. dollars)

Net investment income

$ 373

$ 455

$ 239

$ 312

$ 256

Net realized (losses) gains

(111)

(24)

(135)

(4)

(57)

(61)

$ 303

Net unrealized (losses)
gains

Earnings (losses) from
equity method investments

Other comprehensive
income:

Unrealized (losses) gains
on fixed income securities,
AFS, net of reclassification
adjustments excluding
foreign exchange

TIR ($)

TIR %

Adjusted TIR %*

(1,070)

(409)

(1,479)

(206)

384

178

288

1,335

1,623

—

(74)

—

239

(570)

—

(570)

(100)

—

(100)

—

$ (1,378) $

(425)

$ (1,803) $ (71)

493

$ 422

$ 632

1,622

$ 2,254

(9.3) %

2.3 %

(8.2) %

(9.0) %

(0.5) %

(8.2) %

(0.2) %

1.6 %

8.8 %

2.0 %

3.6 %

5.7 %

2.4 %

36.9 % 14.6 %

36.9 % 12.4 %

*Non-GAAP measure; refer to "Non-GAAP Financial Measures" section for reconciliation to the applicable GAAP financial measure.

Net Investment Income

2022 versus 2021: Net investment income increased primarily due to:

•

an increase in our average aggregate fixed income assets of $1.2 billion due to new business acquired during
2022 and late 2021; and

an increase in our book yield of 63 basis points due to a combination of investment of new premium and
reinvestment of fixed income securities at higher yields and the impact of rising short-term interest rates on the
$2.9 billion of our fixed income securities that are subject to floating interest rates. Our floating rate investments
generated increased net investment income of $59 million, which equates to an increase of 195 basis points on
those investments in comparison to the prior year.

2021 versus 2020: Net investment income increased primarily due to:

•

an increase in our average aggregate fixed income assets of $4.2 billion due to new business during 2021;
partially offset by

Enstar Group Limited | 2022 Form 10-K

(in millions of U.S. dollars)$455$312$303202220212020

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

•

a decrease in the investment yield primarily due to time required to invest premium from 2021 transactions.

Net Realized and Unrealized (Losses) Gains included in Comprehensive Income

2022 versus 2021: The negative variance of $2.2 billion when comparing net realized and unrealized losses in
2022 to net realized losses and net unrealized gains in 2021 was the result of:

•

an increase in net realized and unrealized losses on fixed income assets, including OCI of $1.4 billion, primarily
driven by more than 270 basis points of rising interest rates across U.S., U.K. and European markets, in
addition to widening of investment-grade credit spreads through 2022; and

net realized and unrealized losses on other investments, including equities, of $433 million compared to net
gains of $327 million in 2021. The unfavorable variance of $760 million was primarily driven by:

◦

losses from our public equities, fixed income funds, CLO equities and hedge funds in 2022, largely as a
result of global equity market declines and the widening of high yield and leveraged loan credit spreads; in
comparison to

net realized and unrealized gains recognized in 2021 in our fixed income funds, public equity, private equity
CLO equities, private debt and real estate holdings, driven by the tightening of high yield and loan spreads
and rallies in global equity markets.

2021 versus 2020: Net realized and unrealized gains decreased primarily due to:

•

net realized and unrealized losses on fixed income assets, including OCI of $310 million in 2021 compared to
net realized annualized gains, including OCI of $376 million in the prior year, a negative variance of $686
million, which was primarily driven by rising interest rates across U.S., U.K. and European markets, partially
offset by a tightening in credit spreads; and

a decrease in net realized and unrealized gains on other investments, including equities, of $1.0 billion or
75.5%, from the prior year. This was primarily driven by:

◦

net realized and unrealized losses of $58 million in the InRe Fund primarily due to the deterioration of global
and Chinese equity markets through the second half of 2021, including Chinese American Depository
Receipts (“ADRs”), to which the fund had exposure; partially offset by

Enstar Group Limited | 2022 Form 10-K

(in millions of U.S. dollars)$(135)$(61)$19$(1,479)$178$1,623$(570)$(100)$70Net realized (losses) gainsNet unrealized (losses) gainsNet unrealized (losses) gains on fixed income securities, AFS202220212020

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

◦

net realized and unrealized gains of $327 million in our public equity, private equity and CLO equities,
driven by tightening of high yield and loan spreads and rallies in global equity markets.

This was in comparison to net realized and unrealized gains of $1.3 billion recognized in 2020, mainly
driven by unrealized gains of $1.2 billion relating to the InRe Fund.

Earnings (losses) from equity method investments

Effective September 1, 2021, Enhanzed Re was consolidated by us8. Prior to that date, the results of Enhanzed Re
were recorded in earnings (losses) from equity method investments on a one quarter lag.

2022 versus 2021: The negative variance of $167 million when comparing losses in 2022 from equity method
investments to earnings in 2021 was primarily due to:

•

our acquisition of the controlling interest in and subsequent consolidation of Enhanzed Re in 2021 (which
included $82 million of equity method earnings prior to its consolidation in September 2021); and

recognizing a $52 million other-than-temporary impairment to the carrying value of one of our equity method
investments.

The consolidated net loss from Enhanzed Re was $235 million for the year ended December 31, 2022, driven by
unrealized investment losses which compared to the $82 million from Enhanzed Re that was included in equity
method investment earnings in 2021.

2021 versus 2020: Earnings from equity method investments decreased, primarily due to:

•

a reduction in Enhanzed Re earnings, primarily driven by catastrophe losses from the European storms,
German floods and worsening of COVID-19 claims sustained in the second quarter of 2021 for which our share
of losses was $35 million, partially offset by significant net realized and unrealized gains on investments in the
last quarter of 2020; and

a reduction in Monument Re earnings as a result of a decrease in bargain purchase gains relative to the
comparative period.

8 Refer to Note 4 to the consolidated financial statements for further information.

Enstar Group Limited | 2022 Form 10-K

(in millions of U.S. dollars)$(74)$93$239202220212020

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

Investable Assets

The below charts are in billions of U.S. dollars

•

from
Investable assets decreased by 10.0%
December 31, 2021
to December 31, 2022,
primarily due to a decline in the carrying value of
our fixed income assets and other investments,
including equities, and due to assets used to
support net paid losses, partially offset by assets
assumed from new transactions during the year.

investments,

including equities, and

Adjusted investable assets* decreased by 1.2%
from December 31, 2021 to December 31, 2022, as
a result of a decline in the carrying value of our
the
other
impact of net paid losses, partially offset by assets
assumed from new transactions during the year.
Cash and cash equivalents decreased by $762
million from December 31, 2021 to December 31,
2022, primarily as a result of the redeployment of a
portion of the InRe Fund redemptions to other
investments, including equities.

*Non-GAAP measure; refer to "Non-GAAP Financial Measures" section for reconciliation to the applicable GAAP financial measures.

Duration and average credit rating

The fair value, duration and average credit rating by segment is as follows:

Segment

Investments

Run-off

Assumed Life

Total - Investments

Legacy Underwriting

Fair Value ($) (1)

9,871

908

10,779

179

Total

10,958

2022

Average
Duration (in
years) (2)

4.02

8.90

4.44

2.26

4.40

Average Credit
Rating (3)

Fair Value ($) (1)

2021

Average
Duration (in
years) (2)

Average Credit
Rating (3)

A+

A-

A+

AA-

A+

12,680

1,454

14,134

212

14,346

4.54

14.62

5.69

2.37

5.72

A+

A-

A+

AA-

A+

(1) The fair value of our fixed income securities and cash and cash equivalents by segment does not include the carrying value of cash and cash

equivalents within our funds held-directly managed portfolios.

(2) The average duration calculation includes cash and cash equivalents, short-term investments and fixed income securities, as well as the fixed

income securities and cash and cash equivalents within our funds held-directly managed portfolios.

(3) The average credit ratings calculation includes cash and cash equivalents, short-term investments, fixed income securities and the fixed

income securities within our funds held - directly managed portfolios.

The overall decrease in the balance of our fixed income securities and cash and cash equivalents of $3.4 billion for
the year ended December 31, 2022 was driven by the redeployment of a portion of the InRe Fund redemptions from
cash and cash equivalents to other investments, including equities, the recognition of net unrealized losses on our
fixed income securities as described above and the impact of net paid losses.

As of both December 31, 2022 and 2021, our fixed income securities and cash and cash equivalents had an
average credit quality rating of A+ .

As of December 31, 2022 and 2021, our fixed income securities that were non-investment grade (i.e. rated lower
than BBB- and non-rated securities) comprised 6.5% and 5.6% of our total fixed income securities portfolio,

Enstar Group Limited | 2022 Form 10-K

Investable Assets$19.5$21.7Fixed income securitiesOther investments, including equities and EMICash and cash equivalentsFunds held by reinsured companiesDecember 31, 2022December 31, 2021Adjusted Investable Assets*$21.4$21.6Fixed income securitiesOther investments, including equities and EMICash and cash equivalentsFunds held by reinsured companiesDecember 31, 2022December 31, 2021

Item 7 | Management Discussion and Analysis | Key Performance Measures

Table of Contents

respectively. The increase in non-investment grade fixed income securities was driven by the redeployment of a
portion of the InRe Fund redemptions to higher-yielding fixed income securities during the year.
General and administrative expenses

2022 to 2021: The $36 million decrease in general and administrative expenses was driven by reductions in
professional fees and salaries and benefits expenses, driven by a reduction in variable incentive plan results. This
was partially offset by an increase in accrued short term incentives.

2021 to 2020: The $135 million decrease in general and administrative expenses was primarily driven by the
decision to place StarStone International in run-off and the sale of Atrium. There was an additional decrease in
salaries and benefits expenses due to reductions in performance-based salaries and benefits costs and lower
headcount.

Enstar Group Limited | 2022 Form 10-K

(in millions of U.S. dollars)$193$45$30$2$61$331$202$57$36$10$62$367$214$43$36$158$51$502202220212020Salaries and benefitsProfessional feesIT CostsLegacy UnderwritingOtherTotal

Item 7 | Management Discussion and Analysis | New Business

Table of Contents

New Business

We define new business as material transactions, which generally take the form of reinsurance or direct business
transfers, or business acquisitions.

When we acquire new business through reinsurance or direct business transfers, the liabilities we assume typically
exceed the fair value of the assets we receive. This is generally due to the future earnings expected on the assets.

The difference between the liabilities assumed and the assets acquired is recorded as a DCA or DGL, which is then
amortized over the expected settlement period. As such, the performance of the new business is assessed over
time by comparing the net of investment income, loss reserve development and amortization of the DCA or DGL.

The table below sets forth a summary of new business that we have completed between January 1, 2022 and
December 31, 2022:

Transaction

Total
Assets
Assumed

Total Assets
from
Transactions

DCA (1)

Total
Liabilities
from
Transactions

Type of
Transaction

Remaining
Limit upon
Acquisition

(in millions of U.S. dollars)

Aspen (2)

1,824 $

47 $

1,871 $

1,871

LPT

537

Probitas

LPT(3)

No limit

Argo (4)

631

724

LPT

Total 2022

2,515 $

141 $

2,656 $

2,656

Line of Business

Jurisdiction

Property, liability and
specialty lines

U.S., U.K.
and Europe

General casualty,
financial and property
lines

U.K. and
international

General casualty,
construction defect,
and professional
indemnity lines

U.S.

(1) Where the estimated ultimate losses payable exceed the premium consideration received at the inception of the agreement, a DCA is

recorded.

(2) We agreed to assume $3.1 billion of net loss reserves, subject to a limit of $3.6 billion. Pursuant to terms of the contract, the amount of net loss
reserves assumed, in addition to the premium consideration provided in the LPT agreement, were adjusted for the original ADC cash premium
of $770 million as well as claims paid between October 1, 2021 and May 20, 2022 and other contractual obligations totaling $394 million.

(3) The LPT converted into a RITC transaction effective January 1, 2023, following regulatory approval.
(4) The amount of net loss reserves assumed were adjusted for claims paid between January 1, 2022 and October 31, 2022. Total liabilities

assumed is comprised of $718 million of net loss reserves and $6 million of other liabilities.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Non-GAAP Financial Measures

Table of Contents

Non-GAAP Financial Measures

In addition to our key financial measures presented in accordance with GAAP, we present other non-GAAP financial measures
that we use to manage our business, compare our performance against prior periods and against our peers, and as
performance measures in our incentive compensation program.

These non-GAAP financial measures provide an additional view of our operational performance over the long-term and
provide the opportunity to analyze our results in a way that is more aligned with the manner in which our management
measures our underlying performance.

The presentation of these non-GAAP financial measures, which may be defined and calculated differently by other companies,
is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in
isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.

Some of the adjustments reflected in our non-GAAP measures are recurring items, such as the exclusion of adjustments to
net realized and unrealized (gains)/losses on fixed income securities recognized in our income statement, the fair value of
certain of our loss reserve liabilities for which we have elected the fair value option, and the amortization of fair value
adjustments.

Management makes these adjustments in assessing our performance so that the changes in fair value due to interest rate
movements, which are applied to some but not all of our assets and liabilities as a result of preexisting accounting elections,
do not impair comparability across reporting periods.

It is important for the readers of our periodic filings to understand that these items will recur from period to period.

However, we exclude these items for the purpose of presenting a comparable view across reporting periods of the impact of
our underlying claims management and investment without the effect of interest rate fluctuations on assets that we anticipate
to hold to maturity and non-cash changes to the fair value of our reserves.

Similarly, our non-GAAP measures reflect the exclusion of certain items that we deem to be nonrecurring, unusual or
infrequent when the nature of the charge or gain is such that it is not reasonably likely that such item may recur within two
years, nor was there a similar charge or gain in the preceding two years. This includes adjustments related to bargain
purchase gains on acquisitions of businesses, net gains or losses on sales of subsidiaries, net assets of held for sale or
disposed subsidiaries classified as discontinued operations, and other items that we separately disclose.

We have changed our non-GAAP measures in 2022 as follows:

•

The opening GAAP balances of our 2021 and 2020 Adjusted BVPS*, Adjusted ROE* and Adjusted RLE* measures have
been retrospectively adjusted for a change in accounting principle9.

• We no longer remove ULAE from our Adjusted RLE and RLE % calculations as our estimate of future claims handling
costs is connected to our claims settlement strategies and outcomes and the RLE measures now reflect the direct and
indirect performance of the management of our liabilities.

*Non-GAAP measure; refer to "Non-GAAP Financial Measures" section for reconciliation to the applicable GAAP financial measure.

9 Refer to the “Consolidated Results of Operations” section for a more detailed description of the change in accounting principle.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Non-GAAP Financial Measures

Table of Contents

The results and GAAP reconciliations for these measures are set forth after the following table, which presents more
information on each non-GAAP measure.

Non-GAAP
Measure

Definition

Adjusted book
value per ordinary
share

Total Enstar ordinary shareholders' equity

Divided by

Number of ordinary shares outstanding, adjusted for:
-the ultimate effect of any dilutive securities on the
number of ordinary shares outstanding

Adjusted return on
equity (%)

Adjusted operating income (loss) attributable to
Enstar ordinary shareholders divided by adjusted
opening Enstar ordinary shareholder's equity

Purpose of Non-GAAP Measure over GAAP Measure

Increases the number of ordinary shares to reflect the exercise of
equity awards granted but not yet vested as, over the long term, this
presents both management and investors with a more economically
accurate measure of the realizable value of shareholder returns by
factoring in the impact of share dilution.

We use this non-GAAP measure in our incentive compensation
program.

Calculating the operating income (loss) as a percentage of our
adjusted opening Enstar ordinary shareholders' equity provides a
more consistent measure of the performance of our business by
enabling comparison between the financial periods presented.

Adjusted
operating income
(loss) attributable
to Enstar ordinary
shareholders
(numerator)

Net earnings (loss) attributable to Enstar ordinary
shareholders, adjusted for:
-net realized and unrealized (gains) losses on fixed
maturity investments and funds held-directly
managed,
-change in fair value of insurance contracts for which
we have elected the fair value option (1),
-amortization of fair value adjustments,
-net gain/loss on purchase and sales of subsidiaries
(if any),
-net earnings from discontinued operations (if any),
-tax effects of adjustments, and
-adjustments attributable to noncontrolling interests

Adjusted opening
Enstar ordinary
shareholders'
equity
(denominator)

Opening Enstar ordinary shareholders' equity, less:
-net unrealized gains (losses) on fixed maturity
investments and funds held-directly managed,
-fair value of insurance contracts for which we have
elected the fair value option (1),
-fair value adjustments, and
-net assets of held for sale or disposed subsidiaries
classified as discontinued operations (if any)

We eliminate the impact of net realized and unrealized (gains) losses
on fixed maturity investments and funds-held directly managed and
the change in fair value of insurance contracts for which we have
elected the fair value option, as:
•

we typically hold most of our fixed income securities until the
earlier of maturity or the time that they are used to fund any
settlement of related liabilities which are generally recorded at
cost; and
removing the fair value option improves comparability since
there are limited acquisition years for which we elected the fair
value option.

•

Therefore, we believe that excluding their impact on our earnings
improves comparability of our core operational performance across
periods.

We include fair value adjustments as non-GAAP adjustments to the
adjusted operating income (loss) attributable to Enstar ordinary
shareholders as they are non-cash charges that are not reflective of
the impact of our claims management strategies on our loss
portfolios.

We eliminate the net gain (loss) on the purchase and sales of
subsidiaries and net earnings from discontinued operations, as these
items are not indicative of our ongoing operations.

We use this non-GAAP measure in our incentive compensation
program.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Non-GAAP Financial Measures

Table of Contents

Non-GAAP
Measure

Definition

Adjusted run-off
liability earnings
(%)

Adjusted prior
period
development
(numerator)

Adjusted PPD divided by average adjusted net loss
reserves

Prior period net incurred losses and LAE, adjusted
to:
Remove(3):
-Legacy Underwriting and Assumed Life operations,
-amortization of fair value adjustments,
-change in fair value of insurance contracts for which
we have elected the fair value option (1),
and
Add:
-the reduction/(increase) in estimates of net ultimate
liabilities and reduction in estimated future expenses
of our defendant A&E liabilities.

Adjusted net loss
reserves
(denominator)

Net losses and LAE, adjusted to:
Remove(3):
-Legacy Underwriting and Assumed Life net loss
reserves,
-current period net loss reserves,
-net fair value adjustments associated with the
acquisition of companies,
-the fair value adjustments for contracts for which we
have elected the fair value option (1) and
Add:
-net nominal defendant A&E liability exposures and
estimated future expenses

Purpose of Non-GAAP Measure over GAAP Measure

Calculating the RLE as a percentage of our adjusted average net
loss reserves provides a more meaningful and comparable
measurement of the impact of our claims management strategies on
our loss portfolios across acquisition years and also to our overall
financial periods.

We use this measure to evaluate the impact of our claims
management strategies because it provides visibility into our ability to
settle our claims obligations for amounts less than our initial estimate
at the point of acquiring the obligations.

The following components of periodic recurring net incurred losses
and LAE and net loss reserves are not considered key components
of our claims management performance for the following reasons:

•

The results of our Legacy Underwriting segment have been
economically transferred to a third party primarily through use of
reinsurance and a Capacity Lease Agreement(2); as such, the
results are not a relevant contribution to Adjusted RLE, which is
designed to analyze the impact of our claims management
strategies;
The results of our Assumed Life segment relate only to our
exposure to active property catastrophe business; as this
business is not in run-off, the results are not a relevant
contribution to Adjusted RLE;
The change in fair value of insurance contracts for which we
have elected the fair value option(1) has been removed to
support comparability between the two acquisition years for
which we elected the fair value option in reserves assumed and
the acquisition years for which we did not make this election
(specifically, this election was only made in the 2017 and 2018
acquisition years and the election of such option is irrevocable);
and
The amortization of fair value adjustments are non-cash charges
that obscure our trends on a consistent basis.

We include our performance in managing claims and estimated
future expenses on our defendant A&E liabilities because such
performance is relevant to assessing our claims management
strategies even though such liabilities are not included within the loss
reserves.

We use this measure to assess the performance of our claim
strategies and part of the performance assessment of our past
acquisitions.

Adjusted total
investment return
(%)

Adjusted total
investment return
($) (numerator)

Adjusted total investment return (dollars) recognized
in earnings for the applicable period divided by
period average adjusted total investable assets.

Provides a key measure of the return generated on the capital held in
the business and is reflective of our investment strategy.

Total investment return (dollars), adjusted for:
-net realized and unrealized (gains) losses on fixed
maturity investments and funds held-directly
managed; and
-unrealized (gains) losses on fixed income securities,
AFS included within OCI, net of reclassification
adjustments and excluding foreign exchange.

Provides a consistent measure of investment returns as a
percentage of all assets generating investment returns.

We adjust our investment returns to eliminate the impact of the
change in fair value of fixed income securities (both credit spreads
and interest rates), as we typically hold most of these investments
until the earlier of maturity or used to fund any settlement of related
liabilities which are generally recorded at cost.

Adjusted average
aggregate total
investable assets
(denominator)

Total average investable assets, adjusted for:
-net unrealized (gains) losses on fixed income
securities, AFS included within AOCI
-net unrealized (gains) losses on fixed income
securities, trading

(1) Comprises the discount rate and risk margin components.
(2) As described in Note 5 to our consolidated financial statements.
(3) Effective for 2022, we are no longer excluding ULAE as it relates to our losses and LAE liabilities and are now including estimated future expenses as it

relates to our defendant A&E liabilities in the calculation of Adjusted RLE*, as these provisions are related to our insurance liabilities and contribute to our
claims management performance. The comparative periods in 2021 and 2020 have been adjusted accordingly.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Non-GAAP Financial Measures

Table of Contents

Reconciliation of GAAP to Non-GAAP Measures

The table below presents a reconciliation of BVPS to Adjusted BVPS* as of December 31, 2022, 2021 and 2020:

2022

2021

2020

Equity
(1)

Ordinary
Shares

Per
Share
Amount

Equity
(1)

Ordinary
Shares

Per
Share
Amount

Equity
(1)

Ordinary
Shares

Per
Share
Amount

(in millions of U.S. dollars, except share and per share data)

Book value per ordinary share

$ 4,191

17,022,420 $ 246.20 $ 5,813

17,657,944 $ 329.20 $ 6,326

21,519,602 $ 293.97

Non-GAAP adjustment:

Share-based compensation plans

218,171

Warrants

—

315,205

—

298,095

175,901

Adjusted book value per
ordinary share*

$ 4,191

17,240,591 $ 243.09 $ 5,813

17,973,149 $ 323.43 $ 6,346

21,993,598 $ 288.56

(1) Equity comprises Enstar ordinary shareholders' equity, which is calculated as Enstar shareholders' equity less preferred shares ($510 million

as of each of December 31, 2022, 2021 and 2020), prior to any non-GAAP adjustments.

*Non-GAAP measure.

The table below presents a reconciliation of ROE to Adjusted ROE* for the years ended December 31, 2022, 2021
and 2020:

2022

2021

2020

Net
(loss)
earnings
(1)

Opening
equity (1)

(Adj)
ROE

Net
(loss)
earnings
(1)

Opening
equity (1)

(Adj)
ROE

Net
(loss)
earnings
(1)

Opening
equity (1)

(Adj)
ROE

(in millions of U.S. dollars)

(906) $ 5,813

(15.6) % $

502 $ 6,326

7.9 % $

1,723 $ 4,490

38.4 %

1,181

(89)

210

(560)

(306)

(277)

(200)

(107)

(75)

(33)

119

(130)

(18)

(106)

(128)

(152)

—

(73)

—

(3)

—

(7)

(111)

—

(21)

—

(16)

(266)

—

109

(61) $ 5,511

(1.1) % $

565 $ 5,605

10.1 % $

1,580 $ 3,774

41.9 %

Net (loss) earnings/Opening equity/
ROE (1)

Non-GAAP adjustments:

Net realized and unrealized losses
(gains) on fixed maturity investments
and funds held - directly managed /
Unrealized (losses) gains on fixed
maturity investments and funds held -
directly managed (2)

Change in fair value of insurance
contracts for which we have elected the
fair value option / Fair value of
insurance contracts for which we have
elected the fair value option (3)

Amortization of fair value adjustments /
Fair value adjustments

Net gain on purchase and sales of
subsidiaries

Net earnings from discontinued
operations / Net assets of entities
classified as held for sale and
discontinued operations

Tax effects of adjustments (4)

Adjustments attributable to
noncontrolling interest (5)

Adjusted net (loss) earnings/Adjusted
opening equity/Adjusted ROE*

(1) Net (loss) earnings comprises net (loss) earnings attributable to Enstar ordinary shareholders, prior to any non-GAAP adjustments. Opening
equity comprises Enstar ordinary shareholders' equity, which is calculated as opening Enstar shareholders' equity less preferred shares ($510
million as of each of December 31, 2021, 2020 and 2019), prior to any non-GAAP adjustments.

(2) Represents the net realized and unrealized gains and losses related to fixed income securities. Our fixed income securities are held directly on

our balance sheet and also within the "Funds held - directly managed" balance10.

10 Refer to Note 6 to our consolidated financial statements for further details on our net realized and unrealized gains and losses.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Non-GAAP Financial Measures

Table of Contents

(3) Comprises the discount rate and risk margin components.
(4) Represents an aggregation of the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates,

calculated at the applicable jurisdictional tax rate.

(5) Represents the impact of the adjustments on the net earnings (loss) attributable to noncontrolling interest associated with the specific

subsidiaries to which the adjustments relate.

*Non-GAAP measure.

The below tables present a reconciliation of PPD to Adjusted PPD* and RLE to Adjusted RLE*:

PPD/net loss reserves/RLE

Non-GAAP Adjustments:

Net loss reserves - current period

Assumed Life

Legacy Underwriting

Year
Ended

2022

As at December 31,

2022

2021

2022

PPD

Net loss
reserves

Average
net loss
reserves

(in millions of U.S. dollars)

Year
Ended

2022

RLE %

756 $ 12,011 $

11,926 $

11,969

6.3 %

—

(55)

(45)

—

(135)

—

(181)

(153)

(23)

(91)

(144)

115

201

573

Amortization of fair value adjustments / Net fair value adjustments
associated with the acquisition of companies

Changes in fair value - fair value option / Net fair value adjustments for
contracts for which we have elected the fair value option (1)

Change in estimate of net ultimate liabilities - defendant A&E / Net nominal
defendant A&E liabilities

Reduction in estimated future expenses - defendant A&E / Estimated
future expenses - defendant A&E

(18)

124

(200)

294

572

106

107

573

Adjusted PPD/Adjusted net loss reserves/Adjusted RLE*

489 $ 12,856 $

12,415 $

12,636

3.9 %

PPD/net loss reserves/RLE

Non-GAAP Adjustments:

Net loss reserves - current period

Assumed Life

Legacy Underwriting

Amortization of fair value adjustments / Net fair value adjustments
associated with the acquisition of companies

Changes in fair value - fair value option / Net fair value adjustments for
contracts for which we have elected the fair value option (1)

Change in estimate of net ultimate liabilities - defendant A&E / Net nominal
defendant A&E liabilities

Reduction in estimated future expenses - defendant A&E / Estimated
future expenses - defendant A&E

Year
Ended

2021

As at December 31,

2021

2020

2021

PPD

Net loss
reserves

Average
net loss
reserves

(in millions of U.S. dollars)

Year
Ended

2021

RLE %

403 $ 11,926 $

8,763 $

10,344

3.9 %

—

(143)

(179)

—

(72)

(90)

(6)

(140)

(955)

(548)

106

(75)

107

573

128

615

117

594

Adjusted PPD/Adjusted net loss reserves/Adjusted RLE*

381 $ 12,287 $

8,627 $

10,455

3.6 %

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Non-GAAP Financial Measures

Table of Contents

PPD/Net loss reserves/RLE

Non-GAAP Adjustments:

Net loss reserves - current period

Legacy Underwriting

Amortization of fair value adjustments / Net fair value adjustments
associated with the acquisition of companies

Changes in fair value - fair value option / Net fair value adjustments for
contracts for which we have elected the fair value option (1)

Change in estimate of net ultimate liabilities - defendant A&E / Net nominal
defendant A&E liabilities

Reduction in estimated future expenses - defendant A&E / Estimated
future expenses - defendant A&E

Year
Ended

2020

As at December 31,

2020

2019

2020

PPD

Net loss
reserves

Net loss
Reserves

Average
net loss
reserves

(in millions of U.S. dollars)

Year
Ended

2020

RLE %

32 $

8,763 $

7,941 $

8,352

0.4 %

—

(273)

—

(4)

(702)

(1,184)

119

103

128

615

152

130

561

(137)

(943)

140

588

Adjusted PPD/Adjusted net loss reserves/Adjusted RLE*

287 $

8,607 $

7,652 $

8,129

3.5 %

(1) Comprises the discount rate and risk margin components.
*Non-GAAP measure.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Non-GAAP Financial Measures

Table of Contents

The table below presents a reconciliation of our TIR to our Adjusted TIR* for the years ended December 31, 2022,
2021 and 2020:

2022

2021

2020

Fixed
Income

Other
Investments

Total

Fixed
Income

Other
Investments

Total

Fixed
Income

Other
Investments

Total

(in millions of U.S. dollars)

Net investment income

$ 373

$ 455

$ 239

$ 312

$ 256

Net realized (losses) gains

(111)

(24)

(135)

(4)

(57)

(61)

$ 303

Net unrealized (losses) gains

(1,070)

(409)

(1,479)

(206)

384

178

288

1,335

1,623

Earnings from equity method
investments

Other comprehensive income:

Unrealized (losses) gains on
fixed income securities, AFS, net
of reclassification adjustments
excluding foreign exchange

—

(74)

—

239

(570)

—

(570)

(100)

—

(100)

—

TIR ($)

$ (1,378) $

(425)

$ (1,803) $ (71)

493

$ 422

$ 632

1,622

$ 2,254

Non-GAAP adjustments:

Net realized and unrealized
losses (gains) on fixed maturity
investments and funds held-
directly managed

Unrealized (losses) gains on
fixed income securities, AFS, net
of reclassification adjustments
excluding foreign exchange

Adjusted TIR ($)*

Total investments

1,181

—

1,181

210

—

210

(306)

—

(306)

570

$ 373

$ 9,685

—

570

100

—

100

(70)

—

(70)

(425)

$ (52)

$ 239

493

$ 732

$ 256

4,943

$ 14,628 $ 12,254 $

5,022

$ 17,276 $ 9,319

1,622

$ 1,878

5,938

$ 15,257

Cash and cash equivalents,
including restricted cash and
cash equivalents

Funds held by reinsured
companies

1,330

3,582

—

1,330

2,092

—

2,092

1,373

—

1,373

—

3,582

2,340

—

2,340

636

—

636

Total investable assets

$ 14,597 $

4,943

$ 19,540 $ 16,686 $

5,022

$ 21,708 $ 11,328 $

5,938

$ 17,266

Average aggregate invested
assets, at fair value (1)

14,891

5,188

20,079

15,250

5,590

20,840

11,046

4,397

15,443

TIR %

(9.3) %

(8.2) % (9.0) %

(0.5) %

8.8 %

2.0 %

5.7 %

36.9 % 14.6 %

Non-GAAP adjustment:

Net unrealized (gains) on fixed
income securities, AFS included
within AOCI and net unrealized
(gains) on fixed income
securities, trading

1,827

—

1,827

(89)

—

(89)

(560)

—

(560)

Adjusted investable assets*

$ 16,424 $

4,943

$ 21,367 $ 16,597 $

5,022

$ 21,619 $ 10,768 $

5,938

$ 16,706

Adjusted average aggregate
invested assets, at fair value (2)

$ 15,977 $

5,188

$ 21,165 $ 14,971 $

5,590

$ 20,561 $ 10,756 $

4,397

$ 15,153

Adjusted TIR %*

2.3 %

(8.2) % (0.2) %

1.6 %

8.8 %

3.6 %

2.4 %

36.9 % 12.4 %

(1) This amount is a five period average of the total investable assets, as presented above, and is comprised of amounts disclosed in our quarterly

and annual U.S. GAAP consolidated financial statements.

(2) This amount is a five period average of the Adjusted investable assets*, as presented above.
*Non-GAAP measure.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Other Financial Measures

Table of Contents

Other Financial Measures

In addition to our non-GAAP financial measures presented above, we refer to TIR, which provides a key measure of
the return generated on the capital held in the business. It is reflective of our investment strategy and it provides a
consistent measure of investment returns as a percentage of all assets generating investment returns.

The following table provides the calculation of our TIR by segment for the years ended December 31, 2022, 2021
and 2020:

2022

Legacy
Underwriting

Investments

Total

Investments

2021

Legacy
Underwriting

2020

Total

Investments

Legacy
Underwriting

Total

(in millions of U.S. dollars)

Net investment income:

Fixed income securities

380

Cash and restricted cash

Other investments, including equities

Less: Investment expenses

(25)

Net investment income

445

Net realized (losses) gains:

Fixed income securities

(111)

Other investments, including equities

(24)

Net realized (losses) gains

(135)

Net unrealized (losses) gains:

Fixed income securities

Other investments, including equities

(1,060)

(409)

$ 276

243

$ 268

—

$ 389

273

(25)

—

(37)

$ 455

309

$ (111)

(4)

(24)

$ (135)

(57)

(61)

—

(37)

(14)

$ 312

270

(4)

(57)

$ (61)

(2)

—

(16)

$ 303

$ 18

$ 19

288

1,335

Net unrealized (losses) gains

$ (1,469)

(10)

$ (1,479) $

(10)

(1,070)

(203)

—

(409)

(3)

(206)

—

384

284

1,327

384

181

(3)

$ 178

$ 1,611

$ 1,623

—

239

—

239

(74)

—

(74)

(Losses) earnings from equity method
investments
Other comprehensive (loss) income:

Unrealized (losses) gains on fixed
income securities, AFS, net of
reclassification adjustments excluding
foreign exchange

TIR ($)

Fixed maturity and short-term
investments, trading and AFS and funds
held - directly managed
Other assets included within funds held -
directly managed

Equities

Other investments

Equity method investments

(570)

$ (1,803)

—

(570)

(100)

$ (1,803) $

422

—

(100)

$ 422

$ 2,204

$ 2,254

$ 9,472

159

$ 9,631

$ 12,072

182

$ 12,254

$ 8,669

650

$ 9,319

1,250

3,282

397

—

1,250

3,296

397

201

1,995

2,319

493

—

201

1,995

2,333

493

774

4,146

597

—

847

4,244

235

832

Total investments

$ 14,455

173

$ 14,628

$ 17,080

196

$ 17,276

$ 14,201

1,056

$ 15,257

Cash and cash equivalents, including
restricted cash and cash equivalents

Funds held by reinsured companies

Total investable assets

Average aggregate invested assets, at
fair value (1)
TIR % (2)

Income from fixed income assets (3)

Average aggregate fixed income assets,
at cost (3)(4)
Investment book yield (5)

1,310

3,560

$ 19,325

$ 19,861

(9.1) %

388

1,330

3,582

2,062

2,306

215

$ 19,540

$ 21,448

218

$ 20,079

$ 20,594

2,092

2,340

1,112

554

261

1,373

636

260

$ 21,708

$ 15,867

1,399

$ 17,266

246

$ 20,840

$ 13,982

1,461

$ 15,443

— %

(9.0) %

2.0 %

— %

2.0 %

15.8 %

3.4 %

14.6 %

398

273

276

245

272

15,904

214

16,118

14,733

231

14,964

9,508

1,246

10,754

2.44 %

4.67 %

2.47 %

1.85 %

1.30 %

1.84 %

2.58 %

2.17 %

2.53 %

(1) This amount is a five period average of the total investable assets, as presented above, and is comprised of amounts disclosed in our quarterly

and annual U.S. GAAP consolidated financial statements.

(2) Total investment return % is calculated by dividing total investment return ($) by average aggregate invested assets, at fair value.
(3) Fixed income assets include fixed income securities and cash and restricted cash, and funds held by reinsured companies.
(4) These amounts are an average of the amounts disclosed in our quarterly and annual U.S. GAAP consolidated financial statements.
(5) Investment book yield % is calculated by dividing income from fixed income assets by average aggregate fixed income assets, at cost.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Results of Operations by Segment

Table of Contents

Results of Operations by Segment - For the Years Ended December 31, 2022, 2021 and
2020

Our business is organized into four reportable segments: (i) Run-off; (ii) Assumed Life; (iii) Investments; and
(iv) Legacy Underwriting. In addition, our corporate and other activities, which do not qualify as an operating
segment, includes income and expense items that are not directly attributable to our reportable segments11.

The following is a discussion of our results of operations by segment.

For a description of our segments and our corporate and other activities, see "Item 1. Business - Operating Segments" and "Corporate and

Other" below, respectively.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Results of Operations by Segment | Run-off Segment

Table of Contents

Run-off Segment

The following is a discussion and analysis of the results of operations for our Run-off segment.

2022

2021

Change

2020

Change

(in millions of U.S. dollars)

40 $

182 $

(142) $

59 $

123

INCOME

Net premiums earned

Other income:

Reduction in estimates of net ultimate defendant
A&E liabilities - prior periods

Reduction in estimated future defendant A&E
expenses

All other income

Total other income

Total income

EXPENSES

Net incurred losses and LAE:

Current period

Prior period

Total net incurred losses and LAE

Acquisition costs

General and administrative expenses

Total expenses

(486)

(442)

143

(277)

255

144

(338)

(194)

188

(36)

(4)

(11)

(51)

(193)

(100)

(148)

(248)

(22)

(45)

(315)

103

132

191

(175)

(145)

173

(65)

(4)

(59)

114

(163)

(49)

(10)

SEGMENT NET EARNINGS

339 $

217 $

122 $

143 $

2022 versus 2021: Net earnings from our Run-off segment increased by $122 million, primarily due to:

•

A $148 million increase in favorable PPD, driven by a $78 million increase in the reduction in estimates of net
ultimate losses.

◦

Results for the year ended December 31, 2022 were driven by favorable development of $318 million on
our workers’ compensation line of business as a result of favorable claim settlements, most notably in the
2017 to 2021 acquisition years. We also had favorable development of $56 million on our marine, aviation
and transit lines of business relating to the 2014, 2018 and 2019 acquisition years as a result of favorable
experience across a variety of claim types; partially offset by

Adverse development on our general casualty and motor lines of business of $57 million and $74 million,
respectively, most notably impacting the 2020 acquisition year, as a result of worse than expected claims
experience, adverse development on claims and higher than expected claims severity.

Results for the year ended December 31, 2021 were primarily related to favorable development on our
workers’ compensation, property and marine, aviation and transit lines of business as a result of better than
expected claims experience and favorable results from actuarial reviews, partially offset by adverse
development on our general casualty line of business due to an increase in opioid exposure and increased
expectations of latent claims and a lengthening of the payment pattern related to our 2019 acquisition year.

A decrease in general and administrative expenses of $45 million, primarily driven by a continued decrease in
salaries and benefits and other costs following our exit of our StarStone business beginning in 2020 and a
reduction in IT costs as a result of reduced project activity; partially offset by

A reduction in other income of $51 million, primarily driven by lower favorable prior period development related
to our defendant A&E liabilities; and

Reductions in net premiums earned that were greater than the reductions in current period net incurred losses
and LAE and acquisition costs, following our exit of our StarStone International business beginning in 2020.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Results of Operations by Segment | Run-off Segment

Table of Contents

2021 versus 2020: Net earnings from our Run-off segment increased by $74 million, primarily due to:

•

Net premiums earned increased by $123 million from StarStone International business and new business
transactions executed in recent periods. Net premiums earned of $182 million included $106 million of
premiums from StarStone International, which was transferred into the Run-off Segment on January 1, 2021,
whereas net premiums earned in 2020 were primarily related to AmTrust RITC transactions assumed in 2019.

Net incurred losses and LAE decreased by $49 million due to a $163 million increase in favorable PPD partially
offset by an increase in current period losses of $114 million due to the transfer of the StarStone International
business from the Legacy Underwriting segment on January 1, 2021.

The $163 million increase in favorable PPD primarily consists of:

◦

$51 million increase in favorable development on the workers’ compensation line of business in 2021 as a
result of reduced claims activity, favorable settlements on open claims and the completion of commutations;

$105 million reduction in adverse development on the motor line of business compared to 2020. 2020 was
impacted by higher than expected severity in respect of a recently assumed LPT;

$41 million increase in favorable development on the construction defect line of business in 2021; and

$82 million increase in favorable development on the property and other lines of business in 2021.

This favorable prior period developments were partially offset by;

•

$142 million increases in prior period estimates of net ultimate losses in our general casualty line of
business due to an increase in opioid exposure and greater than expected adverse development.

In addition:

• Other income decreased by $59 million primarily driven by lower favorable prior period development related to

our defendant A&E liabilities; and

•

Acquisition costs increased by $24 million primarily due to the transfer of StarStone International from the
Legacy Underwriting segment on January 1, 2021.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Results of Operations by Segment | Assumed Life Segment

Table of Contents

Assumed Life Segment

On September 1, 2021, we purchased an additional 27.7% in Enhanzed Re, a company that was previously
accounted for as an equity method investment, and increased our ownership to 75.1%. We have consolidated it as
of September 1, 2021 and record the results on a one quarter lag.

On December 31, 2022, we repurchased the remaining 24.9% in Enhanzed Re from Allianz12.

The Assumed Life segment consists of life and property aggregate excess of loss (catastrophe) business. The
catastrophe business was not renewed for 2022. During the third quarter of 2022, we entered into a Master
Agreement with Allianz through which we agreed to a series of transactions that will allow us to unwind Enhanzed
Re in an orderly manner. For the year ended December 31, 2022 we have:

•

Commuted the catastrophe reinsurance business with Allianz; and

Closed an agreement in November 2022 to novate our reinsurance closed block of life annuity policies to
Monument Re.

We expect to record the results of the novation of the life business and the acquisition of the remaining ownership
interest in Enhanzed Re in the first quarter of 2023.

Given our rationalization of the Enhanzed Re reinsurance business, we renamed the segment from Enhanzed Re to
Assumed Life during the third quarter of 2022. We may leverage this segment for any future potential assumed life
business transactions if and when they occur.

The following is a discussion and analysis of the results of operations for our Assumed Life segment.

2022

2021

Change

(in millions of U.S. dollars)

INCOME

Net premiums earned

Total income

EXPENSES

Net incurred losses and LAE:

Current period

Prior period

Total net incurred losses and LAE

Policyholder benefit expenses

General and administrative expenses

Total expenses

SEGMENT NET EARNINGS

Overall Results

Segment earnings increased by $34 million, primarily due to:

17 $

—

(55)

(23)

40 $

5 $

—

(4)

(1)

6 $

(2)

(55)

(57)

(22)

•

A decrease in net incurred losses and LAE, as a result of favorable claim activity and the recognition of a
$26 million gain on commutation13, both related to the catastrophe reinsurance business with Allianz; and

An increase in net premiums earned on the life reinsurance business and in-force catastrophe reinsurance
treaties; partially offset by

An increase in policyholder benefit expenses.

12 Refer to Note 26 to the consolidated financial statements for further information.
13 We recognized a net gain on commutation of $59 million, of which $33 million related to the accelerated amortization of the risk margin fair
value adjustment liability originally recorded upon acquisition of Enhanzed Re’s catastrophe reinsurance business, and is included in
amortization of fair value adjustments in our Corporate and Other activities.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Results of Operations by Segment | Investments Segment

Table of Contents

Investments Segment

The following is a discussion and analysis of the results of operations for our Investments segment.

INCOME

Net investment income:

Fixed income securities

Cash and restricted cash

Other investments, including equities

Less: Investment expenses

Total net investment income

Net realized (losses) gains:

Fixed income securities

Other investments, including equities

Total net realized (losses) gains

Net unrealized (losses) gains:

Fixed income securities

Other investments, including equities

Total net unrealized (losses) gains

Total income

EXPENSES

General and administrative expenses

Total expenses

Earnings (losses) from equity method
investments

2022

2021

Change

2020

Change

(in millions of U.S. dollars)

380 $

273 $

107 $

243 $

(25)

445

(111)

(24)

(135)

(1,060)

(409)

(1,469)

(1,159)

(74)

—

(37)

309

(4)

(57)

(61)

(203)

384

181

429

136

(107)

(74)

(857)

(793)

(1,650)

(1,588)

—

(14)

270

284

1,327

1,611

1,898

(2)

(23)

(20)

(58)

(78)

(487)

(943)

(1,430)

(1,469)

(167)

239

(146)

SEGMENT NET (LOSS) EARNINGS

(1,270) $

485 $

(1,755) $

2,102 $

(1,617)

Overall Results

2022 versus 2021: Net loss from our Investments segment was $1.3 billion compared to net earnings of $485
million in 2021. The unfavorable movement of $1.8 billion was primarily due to:

•

An increase in net realized and unrealized losses on our fixed income securities of $964 million, driven by rising
interest rates and widening of investment grade credit spreads;

Net realized and unrealized losses on our other investments, including equities, of $433 million, in comparison
to gains of $327 million in 2021. The unfavorable variance of $760 million was primarily driven by negative
performance from our public equities, CLO equities and hedge funds as a result of significant volatility in global
equity markets and widening high yield credit spreads; and

Losses from equity method investments of $74 million, in comparison to earnings of $93 million in 2021,
primarily due to the recognition of an other-than-temporary impairment to the carrying value of one of our equity
method investments and our acquisition of the controlling interest in Enhanzed Re, effective September 1, 2021.
Prior to that date, the results of Enhanzed Re were recorded in earnings from equity method investments. Our
consolidated net loss from Enhanzed Re for the year ended December 31, 2022 was $235 million which
compared to $82 million from Enhanzed Re that was included in equity method investment earnings in 2021;
partially offset by

An increase in our net investment income of $136 million, which is primarily due to the investment of new
premium and reinvestment of fixed income securities at higher yields and the impact of rising interest rates on
the $2.9 billion of our fixed income securities that are subject to floating interest rates. Our floating rate

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Results of Operations by Segment | Investments Segment

Table of Contents

investments generated increased net investment income of $59 million, which equates to an increase of 195
basis points on those investments in comparison to 2021.

Total investment losses on the fixed income securities that support our Enhanzed Re life reinsurance business for
the years ended December 31, 2022 and 2021 were $304 million and $17 million, respectively.

2021 versus 2020: Net earnings from our Investments segment decreased by $1.6 billion primarily as a result of
decreases in net realized and unrealized gains of $1.5 billion. The decrease is largely a result of 2021 net realized
and unrealized losses of $58 million related to the InRe Fund, in comparison to net unrealized gains of $1.2 billion in
2020, and 2021 net realized and unrealized losses on our fixed income securities of $207 million, in comparison to
net realized and unrealized gains of $300 million in 2020.

Total Investments

Fixed income securities

Refer to the below tables for the fair value, duration, and credit rating of our fixed income securities by business:

Run-off

2022

Assumed Life (1)

Fair
Value

Duration
(years) (2)

Credit
Rating (2)

Fair
Value

Duration
(years) (2)

Credit
Rating (2)

Total

Total %

(in millions of U.S. dollars, except percentages)

Fixed maturity and short-
term investments, trading
and AFS and funds held -
directly managed

U.S. government & agency $ 496

U.K. government

Other government

Corporate

Municipal

Residential mortgage-
backed

Commercial mortgage-
backed

Asset-backed

Structured products

5.2 %

0.9 %

3.1 %

289

5,031

53.0 %

201

2.1 %

536

5.7 %

1,021

10.8 %

909

—

9.6 %

— %

$ 8,564

90.4 %

5.9

6.5

6.0

5.6

7.9

4.6

2.1

0.5

n/a

4.6

AAA

$ —

AA-

A-

AA-

AA+

A+

n/a

—

134

188

—

586

$ 908

— %

1.4 %

2.0 %

— %

6.2 %

9.6 %

n/a

10.3

6.7

n/a

9.7

9.2

n/a

BBB+

n/a

A-

496

423

5.2 %

0.9 %

4.5 %

5,219

55.0 %

201

2.1 %

536

5.7 %

1,021

10.8 %

909

586

9.6 %

6.2 %

$ 9,472

100.0 %

(1) Investments under the Assumed Life caption comprise those that support our life reinsurance business.
(2) The average duration and average credit rating calculations include short-term investments, fixed maturities and the fixed maturities within our

funds held-directly managed portfolios at December 31, 2022 and 2021.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Results of Operations by Segment | Investments Segment

Table of Contents

Run-off

2021

Assumed Life (1)

Fair
Value

Duration
(years)
(2)

Credit
Rating
(2)

Fair
Value

Duration
(years)
(2)

Credit
Rating
(2)

Total

Total %

(in millions of U.S. dollars, except percentages)

Fixed maturity and short-term
investments, trading and AFS
and funds held - directly
managed

U.S. government & agency

737

U.K. government

Other government

Corporate

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

Structured products

Total

6.1 %

0.7 %

3.2 %

387

6,532

54.1 %

272

2.3 %

597

4.9 %

1,074

937

8.9 %

7.8 %

—
$ 10,618

— %
88.0 %

6.4

9.8

6.8

6.4

9.2

2.8

3.1

0.3

n/a
5.4

AAA

AA-

A-

AA-

AA+

AA-

n/a
A

—

228

193

—

— %

1.9 %

1.6 %

— %

n/a

12.1

6.7

n/a

1,033
1,454

8.5 %
12.0 %

19.2
16.4

n/a

BBB

A-

n/a

A-
A-

737

615

6.1 %

0.7 %

5.1 %

6,725

55.7 %

272

597

1,074

937

2.3 %

4.9 %

8.9 %

7.8 %

1,033
$ 12,072

8.5 %
100.0 %

(1) Investments under the Assumed Life caption comprise those that support our life reinsurance business.
(2) The average duration and average credit ratings calculation includes short-term investments, fixed maturities and the fixed maturities within

our funds held - directly managed portfolios at December 31, 2022 and 2021.

The overall decrease in the balance of our fixed income securities of $2.6 billion for the year ended December 31,
2022 was primarily driven by the recognition of net unrealized losses on our fixed income securities and assets
used to support net paid losses during the period, partially offset by assets assumed from net transactions during
the year.

Other investments, including equities

Refer to the below table for the composition of our other investments, including equities:

Equities

Publicly traded equities

Exchange-traded funds

Privately held equities

Total

Other investments

Hedge funds

Fixed income funds

Equity funds

Private equity funds

CLO equities

CLO equity funds

Private credit funds

Real estate debt fund

Total

2022

2021

Run-off

Assumed Life

Total

Run-off

Total

(in millions of U.S. dollars)

385 $

— $

385 $

281 $

507

358

—

507

358

1,342

372

1,250 $

— $

1,250 $

1,995 $

549 $

— $

549 $

291 $

533

1,282

148

203

362

202

—

547

1,282

148

203

362

202

559

752

161

207

275

281

1,342

372

1,995

291

559

752

161

207

275

3,282 $

14 $

3,296 $

2,319 $

2,319

Our equities decreased by $745 million and our other investments increased by $977 million compared to the prior
year, primarily due to the redeployment from exchange-traded funds into various non-core asset strategies, in line
with our strategic asset allocation. The balances of both equities and other investments were negatively impacted
by net unrealized losses during the period.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Results of Operations by Segment | Investments Segment

Table of Contents

Equity Method Investments

Refer to the below table for a summary of our equity method investments, which does not include those investments
we have elected to measure under the fair value option:

2022

2021

Ownership
%

Carrying
Value

Earnings
(losses) from
Equity Method
Investments

Ownership
%

Carrying
Value

(in millions of U.S. dollars)

Earnings
(losses) from
Equity Method
Investments

2020

Earnings from
Equity Method
Investments

Enhanzed Re

— % $

— $

Citco (1)

Monument Re (2)

Core Specialty

Other

31.9 %

20.0 %

19.9 %

27.0 %

110

211

397 $

—

(65)

(14)

—

(74)

— % $

— $

82 $

31.9 %

20.0 %

24.7 %

27.0 %

194

225

493 $

(6)

(1)

93 $

147

—

239

(1) We own 31.9% of the common shares in HH CTCO Holdings Limited which in turn owns 15.4% of the convertible preferred shares, amounting

to a 6.2% interest in the total equity of Citco III Limited ("Citco").

(2) We own 20.0% of the common shares in Monument Re as well as preferred shares which have a fixed dividend yield and whose balance is

included in the investment amount.

Carrying Value

The carrying value of our equity method investments decreased from December 31, 2021 as a result of recognizing
a $52 million other-than-temporary impairment in one of our equity method investments. Unfavorable cumulative
translation adjustments of $16 million due to the strengthening of the U.S. dollar against the Euro, relating primarily
to our investment in Monument Re whose reporting currency is the Euro, further contributed to the decrease in the
carrying value of our equity method investments for the year ended December 31, 2022.

Earnings (Losses) from Equity Method Investments

We recognized losses from equity method investments in 2022, in comparison to earnings in 2021, primarily due the
other-than-temporary impairment charge and our acquisition of the controlling interest in Enhanzed Re, effective
September 1, 2021. Prior to that date, the results of Enhanzed Re were recorded in earnings from equity method
investments.

Our earnings from equity method investments decreased from 2020 to 2021, due to reductions in both Enhanzed
Re and Monument Re earnings. The reduction in Enhanzed Re earnings was primarily driven by catastrophe
losses, partially offset by significant investment gains in the last quarter of 2020. The reduction in Monument Re
earnings was as a result of a decrease in bargain purchase gains in 2021 in comparison to 2020.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Results of Operations by Segment | Legacy Underwriting Segment

Table of Contents

Legacy Underwriting Segment

The following is a discussion and analysis of the results of operations for our Legacy Underwriting segment.

INCOME

Net premiums earned

Net investment income

Net realized gains

Net unrealized (losses) gains

Other income (expenses)

Total income

EXPENSES

Net incurred losses and LAE

Current Period

Prior Period

Total net incurred losses and LAE

Acquisition costs

General and administrative expenses

Total expenses

2022

2021

Change
(in millions of U.S. dollars)

2020

Change

9 $

58 $

(49) $

513 $

(455)

—

(10)

— $

—

(3)

(15)

(6)

—

(7)

(33)

(22)

(13)

(12)

(8)

(33)

587

375

(4)

371

151

158

680

— $

(93) $

(30)

(2)

(15)

(42)

(544)

(349)

(2)

(351)

(138)

(148)

(637)

SEGMENT (LOSS) EARNINGS

Overall Results

The results for 2022 and 2021 comprise SGL No.1 Limited (“SGL No.1”)'s 25% gross share of the 2020 and prior
underwriting years of Atrium's syndicate 609 whereas the results for 2020 comprise SGL No.1's 25% net share of
Atrium's syndicate 609 and StarStone International, which was transferred to the Run-off segment effective January
1, 2021.

From January 1, 2021 to December 31, 2022, SGL No.1 settled its share of the 2020 and prior underwriting years
for the economic benefit of Atrium, and there was no net retention by Enstar.

The contractual arrangements between SGL No. 1, Arden and Atrium relating to the remaining net loss reserve
liabilities, cash, investments and other assets that support the liabilities as of December 31, 2022 will settle in 2023.
As a result, we do not expect to record any transactions in the Legacy Underwriting segment in 2023.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Corporate and Other

Table of Contents

Corporate and Other

The following is a discussion and analysis of our results of operations for our corporate and other activities.

INCOME

Other income (expense):

Amortization of fair value adjustments (1)
All other income (expense)

Total other income (expense)

Net gain on purchase and sales of subsidiaries

Total income

EXPENSES

Net incurred losses and LAE:

Amortization of fair value adjustments
Changes in fair value - fair value option (2)

Total net incurred losses and LAE

Policyholder benefit expenses

Amortization of net deferred charge assets

General and administrative expenses

Total expenses

Interest expense

Net foreign exchange gains (losses)

Income tax benefit (expense)

Net earnings from discontinued operations, net of
income taxes

Net loss (earnings) attributable to noncontrolling
interests

Dividends on preferred shares

NET LOSS ATTRIBUTABLE TO ENSTAR
ORDINARY SHAREHOLDERS

2022

2021

Change

2020

Change

(in millions of U.S. dollars)

(7) $

—

(18)

(200)

(218)

—

142

(89)

—

(36)

(16) $

—

(16)

9 $

(73)

(45)

(12) $

(7)

(19)

(16)

(75)

(59)

131

128

(69)

(27)

—

(15)

(36)

(34)

(125)

(159)

(1)

(124)

(20)

—

119

147

—

136

322

(59)

(16)

(24)

(36)

(4)

(12)

(194)

(206)

(5)

(194)

(10)

(3)

(16)

(43)

—

(15) $

(206) $

191 $

(429) $

223

(1) Amortization of fair value adjustments relates to the acquisition of DCo, LLC and Morse TEC LLC.
(2) Comprises the discount rate and risk margin components.
Overall Results

2022 versus 2021: Net loss from corporate and other activities decreased by $191 million, primarily due to:

•

A change in net loss (earnings) attributable to noncontrolling interests of $90 million, as a result of net losses
sustained in 2022 for those companies where there are noncontrolling interests;

A favorable change in income tax benefit of $39 million, primarily driven by current year pre-tax losses reported
in the US for which we are able to recognize a partial deferred tax asset; and

A reduction in net incurred losses of $159 million primarily driven by:

◦

A $125 million favorable change in the fair value of liabilities relating to our assumed retroactive reinsurance
agreements for which we have elected the fair value option due to increases in interest rates; and

A $34 million favorable change in the amortization of fair value adjustments, primarily driven by the release
of fair value adjustment liabilities of $33 million following the commutation of the Enhanzed Re catastrophe
reserves.

This was partially offset by:

•

An absence of the prior year net gain on purchase and sales of subsidiaries of $73 million, as described below.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Corporate and Other

Table of Contents

2021 versus 2020: Net loss from corporate and other activities decreased by $223 million, primarily due to:

•

A net gain recognized on the purchase and sales of subsidiaries of $73 million, which has two components: i)
the $47 million gain recognized on the Step Acquisition of Enhanzed Re and ii) the net gain on sales of
subsidiaries of $26 million, primarily as a result of the gain on the sale of SUL of $23 million;

A reduction in net incurred losses of $206 million primarily driven by the change in the fair value of liabilities for
which we have elected the fair value option due to increases in corporate bond yields, partially offset by
tightening credit spreads for the year ended December 31, 2021, in comparison to declining interest rates
partially offset by widening credit spreads for the year ended December 31, 2020.

This was partially offset by:

•

An unfavorable change in net (earnings) loss attributable to noncontrolling interest of $43 million, due to higher
earnings in 2021 for those companies where there is a noncontrolling interest.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Current Outlook

Table of Contents

Current Outlook

Run-off Outlook

Transactions

On February 16, 2023, certain of our wholly-owned subsidiaries entered into an LPT agreement with certain
subsidiaries of QBE Insurance Group Limited (“QBE”) relating to a diversified portfolio of business underwritten
between 2020 and 2018. The LPT agreement covers ground up net loss reserves of $1.9 billion and provides an
additional $900 million of development coverage. Upon completion, a portion of the portfolio currently underwritten
via QBE’s Lloyd’s syndicates 386 and 2999 will be transferred to Enstar’s Syndicate 2008.

On February 21, 2023, one of our wholly-owned subsidiaries entered into an agreement with RACQ Insurance
Limited (“RACQ”) to reinsure 80% of RACQ’s motor vehicle Compulsory Third Party (“CTP”) insurance liabilities,
covering accident years 2021 and prior. RACQ will cede net reserves of AUD$360 million (USD $243 million), and
our subsidiary will provide AUD$200 million (USD $135 million) of additional cover in excess of the ceded reserves.

The closing of both transactions is subject to regulatory approval and other closing conditions.

We continue to evaluate transactions in our active pipeline including LPTs, ADCs, and other transaction types
including acquisitions. We seek opportunities to execute on creative and accretive transactions by offering
innovative capital release solutions that enable our clients to meet their capital and risk management objectives.
Should we execute additional transactions, our mix of loss reserves by line of business, asset mix and both rate and
timing of earnings may be impacted in the medium term.

We expect we will invest a significant portion of premium on new transactions in fixed income securities which will
deliver accretive book yields at the current elevated rates.

Seasonality

We complete most of our annual loss reserve studies in the fourth quarter of each year and, as a result, tend to
record the largest movements, both favorable and adverse, to net incurred losses and LAE in this period.

In the interim periods where a reserve study has not been completed, we perform quarterly reviews to ascertain
whether changes to claims paid or case reserves have varied from our expectations developed during the last
annual reserve review. In this event, we consider the timing and magnitude of the actual versus expected
development, and we may record an interim adjustment to our recorded reserves if, and when, warranted.

Enhanzed Re

On November 7, 2022, we completed the novation of our closed block of life business. We expect to recognize
other income of $328 million, which we will record in the first quarter of 2023 as a result of the one quarter reporting
lag with Enhanzed Re.

The amount of other income we will ultimately recognize will include the gain or loss on novation, activity for the
period from October 1, 2022 to November 7, 2022 and the reclassification of amounts from AOCI, comprising the
remeasurement adjustment to our future policyholder benefit liabilities upon adoption of the LDTI standard on
January 1, 2023.

Our net earnings attributable to Enstar will be reduced by the amount attributable to Allianz’s 24.9% noncontrolling
interest in Enhanzed Re at the time of the transaction and a portion of our other income recorded will be subject to
deferral over the expected settlement period for the life annuity policies to account for our pre-existing 20%
ownership interest in Monument Re.

Investment Outlook

We expect global financial markets to remain uncertain into 2023 as a result of a potential economic recession,
continued inflationary pressures, notably from the increased cost of services and a tight labor market with resultant
tightening of financial conditions by global central banks, and continued geopolitical conflicts and tensions.

In 2022, we recognized significant unrealized losses on our fixed income securities, a trend that could continue,
albeit with a likely less severe impact, in the event that interest rates continue to rise and/or credit spreads widen. If

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Current Outlook

Table of Contents

we renew credit facilities in the current environment, we would likely incur a higher rate of borrowing and interest
costs as a result.

We expect that unrealized losses on our fixed income securities will be recouped as these assets get closer to their
maturity and the prices pull to par. We may undertake tactical repositioning of our portfolio as opportunities arise to
achieve a better result, rather than waiting for certain fixed income securities to pull to par value.

Elevated interest rates can represent an opportunity for us in the medium to long term, notably;

• We hold approximately 15% of our portfolio in individual fixed income securities that have floating interest rates
which, should interest rates remain elevated, we expect to be accretive to future investment income book yields.
We have earned $155 million of net investment income for the year ended December 31, 2022 from our floating
rate investments, which are generally indexed to LIBOR.

•

Higher interest rates have provided us with the opportunity to reinvest at higher yields as our securities mature
or as we invest premium received from new business.

Global equity markets are expected to remain cautious in 2023, and this, combined with our reporting lag on certain
investments, will impact the valuation of our non-core risk investments. We invest in public equity, private equity and
alternatives (including hedge fund investments), which may vary in the magnitude of their exposure to any potential
economic recession.

Anticipations of an economic downturn, including lower earnings and lower equity multiples on equities in 2023, may
further negatively impact our non-core investments but may also impact expectations of future interest rates with the
resulting impact to our fixed income securities.

Despite these challenges, we remain committed to our strategic asset allocation and expect our non-core
investments to provide attractive risk adjusted returns and diversification benefits over the medium to long term.

We expect to continue to benefit from our allocation to investments with inflationary pass-through components,
including investments in private equity, private credit, real estate, and infrastructure asset classes and will continue
to seek other attractive investment opportunities throughout 2023.

Inflation

We continue to monitor the inflationary impacts resulting from pandemic-related government stimulus and labor
force supply pressures on our loss cost trends.

Our Run-off net loss reserves primarily consist of general casualty, workers’ compensation and asbestos lines of
business which, as long tailed lines of business, have not been significantly impacted by ongoing inflationary
pressures in comparison to other lines of business, such as property and auto lines.

The currently observed and limited impact of economic inflation on our loss cost trends reflects a combination of the
opportunity we have to re-price seasoned books of business and our claims management model that seeks to settle
claims in an efficient and responsive manner to protect and mitigate the impact to us from adverse outcomes.

While we do not currently see any new trends in the longer term trend of social inflation on certain claims, we
continue to monitor claims in difficult legislative districts, seek to actively settle claims and monitor for reserving
adequacy.

Global economic policy responses to inflation have led to increases in interest rates, which, in the short term, have
had a significant impact on our investments, in particular our fixed income securities. Any further rise in interest
rates will have further negative impacts on our fixed income securities.

There remains uncertainty around the pace and direction of inflation, and it is unlikely that a pause in rate increases,
or even a cut in rates, will occur until late 2023 or even 2024. We continue to monitor liquidity, capital and potential
earnings impact of these changes but remain focused on medium to long term asset allocation decisions.

Inflation, tight labor conditions and higher service costs continue to put pressure on wages and prices, which could
impact our underlying our general and administrative expenses as we remain focused on being a competitive
employer in our market.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Current Outlook

Table of Contents

Russian Invasion of Ukraine

The Russian invasion of Ukraine and the resulting impact on global commodity markets has increased commodity
inflation rates, disrupted supply chains and generated significant insurance losses. In response, many countries
have established comprehensive sanctions regimes increasing both geopolitical tension between NATO and Russia
and market volatility.

To quantify our exposure, we have performed an analysis of, and continue to monitor, our direct investment and
underwriting risks, our acquisition pipeline and the potential for operational disruption (including disruption via our
third party service providers). We have concluded that we have no significant direct impacts from this event. We
continue to monitor for, and respond to, all changes in the global sanctions regime, updating our procedures
accordingly.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Liquidity and Capital Resources

Table of Contents

Liquidity and Capital Resources

Overview

We believe that we have sufficient liquidity and capital resources to meet our business requirements for the next 12
months and thereafter. We aim to generate cash flows from our (re)insurance operations and investments, preserve
sufficient capital for future acquisitions and new business, and develop relationships with lenders who provide
borrowing capacity at competitive rates.

Liquidity and Capital Resources Highlights

Sources of Cash During 2022:

• We received cash, restricted cash and cash equivalents from new business of $140 million;

• We issued Junior Subordinated notes due 2042 of $500 million; and

•

In the fourth quarter, we borrowed and fully repaid $55 million of loans under our revolving credit facility.

Uses of Cash During 2022:

• We repurchased 697,580 of our outstanding ordinary shares for an aggregate price of $163 million;

• We repaid Senior Notes due 2022 and the Enhanzed Re Subordinated notes due 2031 with aggregate

principal balances totaling $350 million;

• We paid $55 million of dividends to our noncontrolling interest holders; and

• We paid $36 million of cash dividends on our Series D and E Preferred Shares.

As of December 31, 2022, we had $822 million of cash and cash equivalents, excluding restricted cash, that
supports (re)insurance operations. Included in this amount was $340 million held by our foreign subsidiaries outside
of Bermuda.

The decrease in total capitalization was due to the increase in realized and unrealized investment losses of $2.2
billion in 2022. On a statutory basis, which excludes the impact of unrealized investment losses and includes

Enstar Group Limited | 2022 Form 10-K

Total Capitalization$6,794$8,423$4,191$5,813$510$510$264$409$1,829$1,69126.9%20.1%34.4%26.1%Debt and Series D and E Preferred Shares to total capitalizationDebt to total capitalizationDebt obligationsNCI and RNCISeries D and E Preferred SharesOrdinary shareholders' equity20222021Total Capitalization Attributable to Enstar$6,530$8,014$4,191$5,813$510$510$1,829$1,69128.0%21.1%35.8%27.5%Debt and Series D and E Preferred Shares to total capitalization attributable to EnstarDebt to total capitalization attributable to EnstarDebt obligationsSeries D and E Preferred SharesOrdinary shareholders' equity20222021

Item 7 | Management Discussion and Analysis | Liquidity and Capital Resources

Table of Contents

discounts for loss reserves, our economic balance sheet strengthened during the year primarily due to higher
interest rates.

Under the eligible capital rules of the Bermuda Monetary Authority (“BMA”), the Preferred Shares qualify as Tier 2
capital when considering the Bermuda Solvency Capital Requirements (“BSCR”).

For purposes of the financial covenants in our credit facilities, total debt excludes hybrid capital (defined as our
Subordinated Notes) not exceeding 15% of total capital attributable to Enstar. As of December 31, 2022, we were in
compliance with the financial covenants in our credit facilities.
Liquidity and Capital Resources of Holding Company and Subsidiaries

Holding Company Liquidity

We conduct substantially all of our operations through our subsidiaries. As such, the potential sources of liquidity to
Enstar as a holding company consist of cashflows from our subsidiaries including dividends, advances and loans,
and interest income on loans to our subsidiaries. We also utilize credit loan facilities, and we have issued senior
notes and preferred shares and guaranteed our Junior Subordinated Notes.

As of December 31, 2022, we had $600 million of available unutilized capacity under our unsecured revolving credit
agreement, which expires in August 2023, and may request additional commitments under the facility up to an
additional $400 million. To date, we have not requested any additional commitments under the facility.

We use cash to fund new acquisitions of companies. We also utilize cash for our operating expenses associated
with being a public company and to pay dividends on our preferred shares and interest and principal on loans from
subsidiaries and debt obligations, including loans under our credit facilities, our Senior Notes and our Junior
Subordinated Notes.

We may, from time to time, raise capital from the issuance of equity, debt or other securities as we continuously
evaluate our strategic opportunities. We filed an automatic shelf registration statement in August 2020 with the SEC
to allow us to conduct future offerings of certain securities, if desired, including debt, equity and other securities.

As we are a holding company and have no substantial operations of our own, our assets consist primarily of
investments in subsidiaries and our loans and advances to subsidiaries. Dividends from our (re)insurance
subsidiaries are restricted by (re)insurance laws and regulations, as described below. The ability of all of our
subsidiaries to make distributions and transfers to us may also be restricted by, among other things, other
applicable laws and regulations and the terms of our credit facilities and our subsidiaries' bank loans and other
issued debt instruments.

Based on our group's current corporate structure with a Bermuda domiciled parent company and the jurisdictions in
which we operate, if the cash and cash equivalents held by our foreign subsidiaries were to be distributed to us, as
dividends or otherwise, such amount would not be subject to incremental income taxes; however, in certain
circumstances withholding taxes may be imposed by some jurisdictions, including by the United States.

Based on existing tax laws, regulations and our current intentions, there were no accruals as of December 31, 2022
for any material withholding taxes on dividends or other distributions.

U.S. Finance Company Liquidity

Enstar Finance is a wholly-owned finance subsidiary under which we have issued our Junior Subordinated Notes.
Similar to our holding company, Enstar Finance is dependent upon funds from other subsidiaries to pay any
amounts due under the Junior Subordinated Notes in the form of distributions or loans, which may be restricted by,
among other things, other applicable laws and regulations and the terms of our credit facilities and our subsidiaries’
bank loans and other issued debt instruments.

Operating Company Liquidity

We expect that our operating companies will generate sufficient liquidity, together with our existing capital base and
cash and investments acquired and from new business, to meet cash requirements and to operate our business.

Sources of funds to our operating companies primarily consist of cash and investment portfolios acquired on the
completion of acquisitions and new business, investment income earned, proceeds from sales and maturities of
investments and collection of reinsurance recoverables. We also collect premiums and fees and commission
income.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Liquidity and Capital Resources

Table of Contents

Cash balances acquired upon the purchase of (re)insurance companies are classified as cash provided by investing
activities, whereas cash from new business is classified as cash provided by operating activities.

The primary uses of funds by our operating companies are claims payments, investment purchases, operating
expenses and collateral requirements.

The ability of our (re)insurance subsidiaries to pay dividends and make other distributions is limited by the
applicable laws and regulations of the jurisdictions in which our (re)insurance subsidiaries operate, including
Bermuda, the United Kingdom, the United States, Australia and Continental Europe, which subject these
subsidiaries to significant regulatory restrictions.

These laws and regulations require, among other things, certain of our (re)insurance subsidiaries to maintain
minimum capital requirements and limit the amount of dividends and other payments that these subsidiaries can
pay to us, which in turn may limit our ability to pay dividends and make other payments.

As of December 31, 2022, all of our (re)insurance subsidiaries’ capital requirement levels were in excess of the
minimum levels required.

Our subsidiaries' ability to pay dividends and make other forms of distributions may also be limited by our
repayment obligations under certain of our outstanding credit facility agreements and other debt instruments.
Variability in ultimate loss payments and collateral amounts required may also result in increased liquidity
requirements for our subsidiaries.
Sources and Uses of Cash

Cash and cash equivalents decreased by $762 million in 2022, which was largely due to cash used in investing and
financing activities of $919 million and $116 million, respectively, partially offset by cash provided by operating
activities of $257 million.

Cash and cash equivalents increased by $495 million in 2021, which was largely due to cash provided by operating
activities of $3.8 billion, partially offset by cash used in investing and financing activities of $2.6 billion and $737
million, respectively.

Cash and cash equivalents increased by $541 million in 2021, which was largely due to cash provided by operating
and financing activities of $2.8 billion and $118 million, respectively, partially offset by cash used in investing
activities of $2.3 billion.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Liquidity and Capital Resources

Table of Contents

Analysis of Sources and Uses of Cash

2022

2021

2020

2022 vs
2021

2021 vs
2020

(in millions of U.S. dollars)

Operating Cash Flow Activities

Net paid losses

Cash acquired on completion of acquisitions and new business

Net sales and maturities of trading securities

Net investment income

Other sources (uses)

Net cashflows provided by operating activities

Investing Cash Flow Activities

$ (1,680) $ (1,431) $ (1,485) $

(249) $

2,015

3,111

357

(251)

1,558

1,653

326

734

457

(1,875)

(2,120)

1,458

641

(985)

3,801

2,786

(3,544)

1,015

140

991

416

390

257

Net sales and maturities (purchases) of AFS securities

207

(2,148)

(1,921)

2,355

Net purchases of Other Investments

(1,132)

(580)

(380)

(552)

Impact of consolidating the opening cash and restricted cash
balances of the InRe Fund

Other sources (uses)

—

574

—

(574)

(419)

(34)

425

Net cash flows used in investing activities

(919)

(2,573)

(2,335)

1,654

Financing Cash Flow Activities

Net proceeds from loans

Preferred share dividends

Share repurchases

Other uses

138

242

180

(104)

(36)

(163)

(942)

(36)

(26)

—

779

(55)

(1)

—

(54)

(227)

(200)

574

(385)

(238)

—

(916)

(1)

Net cash flows (used in) provided by financing activities

(116) $

(737) $

118 $

621 $

(855)

Analysis of Sources and Uses of Cash

Operating Cash Flow Activities

2022 vs 2021: the $3.5 billion decrease in cash provided by operating activities was driven by a decrease in the net
sales and maturities of trading securities of $2.1 billion, which was primarily driven by the deployment of the InRe
funds, liquidated in 2021, into other investments in line with our asset allocation strategy. The decrease was further
driven by a reduction in cash provided from acquisitions of new business of $1.9 billion, as a result of receiving
increased non-cash consideration in 2022, including $1.9 billion of funds held by reinsured companies in relation to
the Aspen LPT and $520 million of fixed income securities, AFS, in relation to the Argo LPT, in comparison to 2021.
The decrease was partially offset by increases of $641 million from other sources and $59 million from net
investment income received.

2021 vs 2020: the $1.0 billion increase in cash provided by operating activities was driven by an increase in the
cash inflows from net sales and maturities of trading securities of $1.5 billion, which was primarily driven by the
liquidation of the InRe Fund, a $457 million increase in cash, restricted cash and cash equivalents from assuming
new business, and a $31 million increase in net investment income received. This was partially offset by decreases
of $985 million from other sources.

Investing Cash Flow Activities

2022 vs 2021: the $1.7 billion decrease in cash used in investing activities was primarily due to net sales and
maturities of fixed income securities, AFS of $207 million in 2022, in comparison to net purchases of $2.1 billion in
2021, partially offset by an increase in purchases of other investments, primarily driven by the deployment of the
InRe funds, of $552 million.

2021 vs 2020: the $238 million increase in cash used in investing activities was driven by an increase in the net
purchases of fixed income securities, AFS of $227 million and an increase in net purchases of other investments of
$200 million, partially offset by the impact of consolidating the opening cash and restricted cash balances of the
InRe Fund of $574 million, in 2021.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Liquidity and Capital Resources

Table of Contents

Financing Cash Flow Activities

2022 vs 2021: the $621 million decrease in cash used in financing activities was primarily driven by the decrease in
share repurchases of $779 million, as our 2021 share repurchases were driven by strategic repurchases as
described below, in addition to a decrease in the net proceeds from loans of $104 million.

2021 vs 2020: cash used in financing activities was $737 million in 2021, in comparison to cash provided by
financing activities of $118 million in 2020. This was primarily due to $942 million of share repurchases in 2021,
including $879 million attributable to the repurchase of Hillhouse Group’s entire interest in Enstar, offsetting an
increase in the net proceeds from loans of $62 million.

Debt Obligations

We utilize debt financing and loan facilities primarily for funding acquisitions and significant new business,
investment activities and, from time to time, for general corporate purposes.

Our debt obligations as of December 31, 2022 and 2021 were as follows:

Origination

Term

2022

2021

(in millions of U.S. dollars)

December 31,

4.50% Senior Notes due 2022

4.95% Senior Notes due 2029

3.10% Senior Notes due 2031

Total Senior Notes

5.75% Junior Subordinated Notes due 2040

5.50% Junior Subordinated Notes due 2042

March 2017

May 2019

August 2021

August 2020

January 2022

10 years

20 years

5.50% Enhanzed Re's Subordinated Notes due 2031

December 2018

12.1 years

Total Subordinated Notes

Total debt obligations

496

495

991

345

493

—

838

280

495

1,270

345

—

421

1,829 $

1,691

5 years

— $

Our debt obligations increased by $138 million from December 31, 2021, primarily due to the issuance of our 2042
Junior Subordinated Notes. This was partially offset by the repayment upon maturity of our 2022 Senior Notes using
proceeds from the 2042 Junior Subordinated Notes and the repayment of Enhanzed Re’s 2031 Subordinated Notes
in accordance with our strategic wind-down of Enhanzed Re’s operations.

Under the eligible capital rules of the Bermuda Monetary Authority (“BMA”), the Senior Notes qualify as Tier 3
capital and the Junior Subordinated Notes qualify as Tier 2 capital when considering the Bermuda Solvency Capital
Requirements (“BSCR”).

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Liquidity and Capital Resources

Table of Contents

Credit Ratings

The following table presents our credit ratings as of March 1, 2023:

Credit ratings (1)
Long-term issuer
2029 Senior Notes
2031 Senior Notes
2040 and 2042 Junior Subordinated Notes
Series D and E Preferred Shares

Standard and Poor’s

Fitch Ratings

BBB (Outlook: Positive)
BBB
BBB-
BB+
BB+

BBB+ (Outlook: Stable)
BBB
BBB
BBB-
BBB-

(1) Credit ratings are provided by third parties, Standard and Poor’s and Fitch Ratings, and are subject to certain limitations and disclaimers. For

information on these ratings, refer to the rating agencies’ websites and other publications.

Agency ratings are not a recommendation to buy, sell or hold any of our securities and may be revised or withdrawn
at any time by the issuing organization. Each agency's rating should be evaluated independently of any other
agency's rating14.

14 For information on risks related to our credit ratings, refer to "Item 1A. Risk Factors - Risks Relating to Liquidity and Capital Resources" and

"Item 1A. Risk Factors - Risks Relating to Ownership of our Shares."

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Liquidity and Capital Resources

Table of Contents

Contractual Obligations

The following table summarizes, as of December 31, 2022, our future payments under material contractual
obligations and estimated payments for losses and LAE for the Run-off segment by expected payment date. The
table includes only obligations that are expected to be settled in cash.

Short-term

Less than
1 Year

Total

Long Term

1 - 3
years

3 - 5
years

6 - 10
years

More than
10 Years

(in millions of U.S. dollars)

1,693 $

156 $

290 $

246 $

359 $

352

4,374

2,401

505

402

1,406

568

546

668

12,915

422

751

237

183

331

139

202

248

1,015

359

163

138

399

167

193

211

660

347

219

2,385

3,005

102

1,852

1,344

490

373

2,985

642

106

604

968

120

2,688

13,337

2,467

3,107

1,913

3,069

2,781

Operating Activities

Estimated gross reserves for losses and LAE (1)

Asbestos

Environmental

General Casualty

Workers' compensation/personal accident

Marine, aviation and transit

Construction defect

Professional indemnity/ Directors & Officers

Motor

Property

Other

Total outstanding losses and IBNR

ULAE

Estimated gross reserves for losses and LAE for
the Run-off segment (1)

Financing Activities

Loan repayments (including estimated interest
payments)

Total

16,387 $

2,556 $

3,283 $

2,089 $

4,406 $

3,050

176

1,337

1,272

4,053

(1) The reserves for losses and LAE represent management’s estimate of the ultimate cost of settling losses. The estimation of losses is based on
various complex and subjective judgments. Actual losses paid may differ, perhaps significantly, from the reserve estimates reflected in our
consolidated financial statements. Similarly, the timing of payment of our estimated losses is not fixed and there may be significant changes in
actual payment activity. The assumptions used in estimating the likely payments due by period are based on our historical claims payment
experience and industry payment patterns, but due to the inherent uncertainty in the process of estimating the timing of such payments, there
is a risk that the amounts paid in any such period can be significantly different from the amounts disclosed above. The amounts in the above
table represent our estimates of known liabilities as of December 31, 2022 and do not take into account corresponding reinsurance
recoverable amounts that would be due to us. Furthermore, certain of the reserves included in the consolidated financial statements as of
December 31, 2022 were acquired by us and initially recorded at fair value with subsequent amortization, whereas the expected payments by
period in the table above are the estimated payments at a future time and do not reflect the fair value adjustment in the amount payable.

Reserves for Losses and LAE

We generally attempt to match the duration of our investment portfolio to the duration of our general liability profile.
We generally seek to maintain investment portfolios that are shorter or of equivalent duration to the liabilities in
order to provide liquidity for the settlement of losses and, where possible, to avoid having to liquidate longer-dated
investments. The settlement of liabilities also has the potential to accelerate the natural payout of losses and
policyholder benefits, which may require additional liquidity. As of as of December 31, 2022 and 2021, the weighted
average durations of our Run-off segment gross reserves for losses and LAE were 4.65 and 6.18, respectively. The
decrease from 2021 was driven by shorter average payouts from new acquisitions and an increase in yield curves
during the year ended December 31, 2022.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Liquidity and Capital Resources

Table of Contents

Future Policyholder Benefits

In November 2022, Enhanzed Re completed a novation of the reinsurance closed block of life annuity policies to
Monument Re. We settled the life liabilities and the related assets at carrying value in return for cash consideration,
and expect to record a gain on novation in our first quarter 2023 results as a result of the one quarter reporting lag15.
Given the novation, we did not include the expected payments of the liability in the table above.

Debt Obligations

The amounts presented in this table represent Enstar’s total debt obligations. Refer to the ‘Debt Obligations’ section
above for further details.

RNCI

In addition to the contractual obligations noted in the table above, we have the right to purchase the redeemable
non-controlling interest (“RNCI”) related to StarStone International from the Trident V Funds and Dowling Capital
Partners I, L.P. and Capital City Partners LLC (collectively, the “Dowling Funds”) after March 31, 2023 (a "call right")
and the RNCI holders have the right to sell their RNCI interests to us after December 31, 2022 (a "put right").
Share Repurchases and Dividends

Our strategy is to retain earnings and invest distributions from our operating subsidiaries into our business. We may
choose to return value to shareholders in the form of share repurchases or dividends. For details on our share
repurchase programs, refer to Note 19 to our consolidated financial statements. To date, we have not declared any
dividends on our ordinary shares. We may re-evaluate this strategy from time to time based on overall market
conditions and other factors.

We have 16,000 Series D Preferred Shares with an aggregate liquidation value of $400 million and 4,400 Series E
Preferred Shares with an aggregate liquidation value of $110 million. The dividends on both Series of Preferred
Shares are non-cumulative and may be paid quarterly in arrears, only when, as and if declared.

Any payment of common or preferred dividends must be approved by our Board. Our ability to pay ordinary and
preferred dividends is subject to certain restrictions.
Off-Balance Sheet Arrangements

As of December 31, 2022, we have entered into certain investment commitments and parental guarantees16. We
also utilize unsecured and secured letters of credit17 (“LOCs”) and a deposit facility. We do not believe it is
reasonably likely that these arrangements will have a material current or future effect on our financial condition,
changes in financial condition, revenues and expenses, results of operations, liquidity, cash requirements or capital
resources.

Investing Activities

Unfunded investment commitments (1)

(1) Refer to Note 25 to our consolidated financial statements for further details.

Short-term

Less than
1 Year

Long Term

More than
1 Year

Total

(in millions of U.S. dollars)

391

1,402

1,793

15
Refer to Note 26 to our consolidated financial statements for further details.
16 Refer to Note 25 to our consolidated financial statements for further details.
17 Refer to Note 17 to our consolidated financial statements for further details.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Critical Accounting Estimates

Table of Contents

Critical Accounting Estimates

We believe the following accounting policies are most dependent on significant judgments and estimates used in
the preparation of our financial statements.
Losses and LAE

Run-off

Losses and LAE liabilities represent our best estimate of the ultimate remaining liability for unpaid losses and LAE
for incurred claims as of the balance sheet date. This includes provisions for claims that have been reported but are
unpaid at the balance sheet date (Outstanding Loss Reserves, or "OLR") and for obligations on claims that have
been incurred but not reported ("IBNR") at the balance sheet date. IBNR may also include provisions to account for
the possibility that reported claims may settle for amounts that differ from the established case reserves as well as
the potential for closed claims to re-open.

Establishing loss reserves can be complex and is subject to considerable uncertainty. Because a significant amount
of time can lapse between our assumption of the risk, the occurrence of a loss event, the reporting of the event to
us and the ultimate payment of the claim on the loss event, the liability for unpaid losses and LAE is based largely
upon estimates. Certain types of exposure, typically latent health exposures such as asbestos-related claims, have
inherently long reporting delays, in some cases many years, from the date a loss occurred to the manifestation and
reporting of a claim and ultimately until the final settlement of the claim, and that could impact the amount of
reliance we place on our actual historical data.

We use considerable judgment in the process of developing these estimates of loss reserves, which involves
uncertainty in several areas, including use of actual or industry data for model inputs, and various projection
assumptions and judgements depending on product lines, coverage type, or policy year. We may record additional
estimates based upon our judgement as to the applicability of the facts, circumstances and external environment to
each portfolio.

As of December 31, 2022 and 2021, IBNR reserves (net of reinsurance balances recoverable) accounted for $6.1
billion, or 51.3%, and $6.8 billion, or 59.4%, respectively, of our total Run-off net losses and LAE reserves, excluding
ULAE18.

Our estimate of loss reserves for each portfolio generally relies on the following key judgments:

•

The degree of reliance upon historic actual claims trends or industry data for claims trends.

Separation of each portfolio into homogenous data sets, generally by line of business, or reserving class.

• Methods used in analyzing and projecting potential reserve positions and the mix of methods selected to form

an aggregate reserve position for each portfolio19.

• Our degree of reliance or adjustment as a result of external factors such as economic conditions (inflation and
unemployment statistics), legal conditions (judicial rulings in each relevant jurisdiction) and social &
environmental factors (medical cost trends, changes in regulations or public health).

•

Consideration of additional information such as changes in claims handling activities, third party claims
operating reviews, third party actuarial reviews or changes in our reinsurance programs.

Judgments are based on numerous factors and may be revised as additional data becomes available, as new or
improved methods are developed, or as laws change. This means that ultimate loss payments may differ from the
losses and LAE estimate made at the balance sheet date.

In addition, key assumptions are made within each method, although the sensitivity to each assumption may vary
within each method and even within each reserving class and accident year of each method. Such assumptions
would include:

•

Loss development factors are used to extrapolate current losses on an accident year to our full expected losses
based upon judgements of historical trends on earlier accident years.

For a breakdown of our Run-off gross and net losses and LAE reserves by line of business, and ULAE, as of December 31, 2022 and 2021,
refer to Note 10 to our consolidated financial statements.
Refer to Note 10 to our consolidated financial statements for further description of the methodologies used for establishing reserves.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Critical Accounting Estimates

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•

Tail factors further extrapolate our longer tailed lines where payments expected in later years or decades can be
more uncertain than settlements that preceded them both in the timing and amount of cash flows. As such,
lines with more expected payments in the tail are more sensitive to tail assumptions.

Expected loss ratios are used for years where we do not yet have credible experience.

Loss cost trend factors are used to extrapolate future loss expectations based upon observed trends.

We perform, at least annually, a formal review process of each portfolio of reserves in accordance with Actuarial
Standards of Practice. These reviews may be performed using internal or independent credentialed actuaries.

In addition, we project expected paid and incurred loss development for each class of business, which is monitored
on a quarterly basis. Should actual paid and incurred development differ significantly from the expected paid and
incurred development, we will investigate the cause and, in conjunction with our actuaries, consider whether any
adjustment to total loss reserves is required.

Adjustments resulting from changes in our estimates are recorded in the period when such adjustments are
determined. The ultimate liability for losses and LAE is likely to differ from the original estimate due to a number of
factors, primarily consisting of the overall claims activity occurring during any period, including the completion of
commutations of assumed liabilities and ceded reinsurance receivables, policy buy-backs and general incurred
claims activity.

Loss Reserving (Latent Claims)

Sensitivity to Underlying Assumptions of our Actuarial Methods

While we believe our reserve for losses and LAE at December 31, 2022 is reasonable, the estimation of these
reserves is a complex process that depends on a number of factors and assumptions. As noted previously, our best
estimate of our loss reserves involves considerable judgement, considering the results from a number of reserving
methodologies. Therefore, these estimates are susceptible to changes in assumptions. We consider each of the
following sensitivities a reasonable deviation for the key assumptions for each of our significant lines of business.

Line of Business

Net
Reserves

Sensitivity

Estimated range in variation

Asbestos

1,628

General Casualty
Workers’
Compensation

Professional
Indemnity/Directors
and Officers

Motor

(in millions of U.S. Dollars)

+/- 10% in expected number of claims
+/- 10% in average indemnity
+/- 10% in tail development factor (5+ years)
+/- 1% in loss cost trend

4,254

2,175

+/- 2.5% increase in medical inflation

1,250

+/- 2.5% in loss cost trend

377

+/- 2.5% in loss cost trend

+/- $125
+/- $165
+/- $190
+/- $195

+/- $455

+/- $105

+/- $35

Asbestos – Reserve estimates for this line are subject to greater variability than reserves for more traditional
exposures. Claims are spread across multiple policy years based on the still evolving case law in various
jurisdictions and inconsistent court decisions and judicial interpretations, making historical development patterns
unreliable to forecast the future claim payments. A key consideration in setting our asbestos reserves is the volume
of future claim filings, and the average indemnity of those claims.

General Casualty – This is a long tail class of business with long reporting and paid developing factors, and we
generally use a combination of reserving methodologies on this line. Because of the long tail nature, the reserves
are susceptible to variation in loss development factors and loss cost trends that may develop over an extended
period of time over multiple accident years. A key assumption in setting our general casualty reserves is the
provision for claim payments in the tail.

Workers’ Compensation – We generally use a combination of loss development and expected loss ratio methods
due to the long tail nature of this line. A portion of our workers’ compensation reserves cover medical expense for
future treatments of injured workers. Given the long development patterns associated with workers’ compensation
business, these claims are exposed to medical inflation.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Critical Accounting Estimates

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Professional Indemnity/Directors and Officers – Due to the nature of this line, there is increased uncertainty in
the number and severity of claims, which results in an expectation of high volatility and uncertainty in loss trends.

Motor - This business is generally more short tail in nature, and the majority of the claims are resolved within a few
years of occurrence. A key component in estimating motor reserves is the severity of claims.

Asbestos Claims

A number of our subsidiaries, and counterparties who underwrote the insurance policy portfolios we assumed, have
exposure to bodily injury claims from alleged exposure to asbestos.

•

The United States asbestos exposure arises mainly from general liability insurance policies underwritten prior to
1986, which our subsidiaries or counterparties either wrote directly, on a primary or excess basis, or as
reinsurance.

• Our United Kingdom asbestos exposures emanate from Employers' Liability insurance policies written in 2005

and prior.

Asbestos bodily injury claims differ from other bodily injury claims due to the long latency period for asbestos, which
often triggers a policyholder’s coverage over multiple policy periods. The long latency period, combined with the
lack of clear judicial precedent with respect to coverage interpretations and expanded theories of liability, increases
the uncertainty of the asbestos claim reserve estimates.

As of December 31, 2022 and 2021, the net loss reserves for asbestos-related claims comprised 13.6% and 16.7%,
respectively, of total Run-off net reserves for losses and LAE liabilities excluding ULAE. In addition as of December
31, 2022 and 2021, we also had $786 million and $826 million of defendant asbestos liabilities, respectively20 .
Environmental Claims

Our subsidiaries and counterparties who underwrote the insurance policy portfolios we assumed have exposure to
environmental claims from general liability insurance policies written prior to the mid-1980s, that were not
specifically written to cover damage to the environment from gradual releases of pollutants. Similar to asbestos,
there is additional uncertainty with respect to environmental reserves as compared to other general liability
exposures. This added uncertainty is due to the multiple policy periods and allocation of claims to policy years,
number of solvent potentially responsible parties at any site, ultimate cost of the remediation, the number of ultimate
sites and changes to judicial precedence.

As of December 31, 2022 and 2021, the net loss reserves for environmental pollution-related claims comprised
2.8% and 3.2%, respectively, of total Run-off net reserves for losses and LAE excluding ULAE. In addition, we also
have $10 million and $11 million as of December 31, 2022 and 2021, respectively, of direct environmental
liabilities21.
Asbestos and Environmental Reserving

The ultimate losses from A&E claims cannot be estimated using traditional actuarial reserving methods that
extrapolate losses to an ultimate basis using loss development, and therefore we use alternative projection
methods. Claims are spread across multiple policy years based on the still evolving case law in each jurisdiction,
making historical development patterns unreliable to forecast the future claim payments. Our estimate of loss
reserves for A&E claims relies on the following key factors and judgements:

•

The degree of reliance or adjustment based on the legal and social environment, to which these liabilities are
particularly sensitive. The current legal environment and the impact of specific settlements that may be used as
precedents to settle future claims are key with these types of claims.

The degree of reliance upon actual claims data and trends or industry data for claims trends.

• Methods used in analyzing and projecting potential reserve positions and the mix of methods selected to form

an aggregate reserve position for each portfolio22.

Judgements are based on numerous factors and may be revised as additional data becomes available, as new or
improved methods are developed, or as laws change. This means that ultimate loss payments may differ from the
losses and LAE estimate made at the balance sheet date.

20 As described in Note 12 in our consolidated financial statements.
21 As described in Note 12 in our consolidated financial statements.
22 Refer to Note 10 in our consolidated financial statements, for further description of the methodologies used for establishing reserves.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Critical Accounting Estimates

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Key assumptions are made within each method, although the sensitivity to each assumption may vary within each
method and even within each reserving class and accident year of each method. When the asbestos exposure
analysis (frequency and severity) method is applied, such assumptions would include:

•

Trends with respect to average claim indemnity, which are used to extrapolate future claim costs.

Trends in claim filing patterns, which will be used to estimate the number of future claims.

We also use a combination of additional actuarial methods, including the paid survival ratio, paid market share,
decay factor, and other methods to periodically reevaluate the continued reasonableness of recorded loss reserves.

Change in Reserve Assumptions

Changes in reserve estimates can be driven by updated experience and by changes in assumptions. These are
linked as updated information leads to changes in assumptions. We have estimated what portion of changes in
ultimate losses from acquisition years 2013 to 2022 are attributable to experience and what portion are attributable
to assumptions.

Line of Business

Ultimate Losses Change due to Experience

Change in

Change due to
Assumptions

Asbestos

General Casualty

Workers’ Compensation
Professional Indemnity/
Directors and Officers

Motor

(0.7) %

2.1 %

(7.6) %

1.4 %

4.0 %

Defendant asbestos and environmental liabilities

(0.5) %

(0.1) %

(5.2) %

(0.1) %

1.1 %

(0.2) %

2.2 %

(2.4) %

1.5 %

2.9 %

Defendant A&E liabilities on our consolidated balance sheets include amounts for indemnity and defense costs for
pending and future claims, determined using standard actuarial techniques for asbestos-related exposures.
Defendant A&E liabilities also include amounts for environmental liabilities associated with our properties. These
are non-insurance liabilities since they are held by non-insurance subsidiaries and are presented separately on our
consolidated balance sheets. These reserves will be sensitive to similar industry trends and assumptions as
observed in our A&E reserves as described under the Loss and LAE section above, specifically claim trends and
indemnity. However, we use utilize different methodologies to estimate the defendant A&E liabilities as compared to
our loss reserves23.

Key drivers for this estimate are the amount of future claim filings and average indemnity, which are key indicators
of the amount of liabilities. The table below provides sensitivities of these drivers for defendant A&E.

Net Liability

Sensitivity

Estimated Range in Variation

$572

(in millions of U.S. Dollars)
+/- 10% in expected number of claims
+/- 10% in average indemnity

+/- $45
+/- $55

Change in Liability Assumptions

Similar to reserves, changes in defendant A&E liabilities can be driven by updated experience and by changes in
assumptions. These are linked as updated information leads to changes in assumptions. We have estimated what
portion of changes in the liabilities are attributable to experience and what portion are attributable to assumptions24.

Change in Total Liability

Change due to Experience
(in millions of U.S. Dollars)

Change due to Assumptions

$(2)

$—

23 As described in Note 12 in our consolidated financial statements.
24

For information on our defendant A&E liabilities, refer to Note 2 and Note 12 in our consolidated financial statements.

Enstar Group Limited | 2022 Form 10-K

Item 7 | Management Discussion and Analysis | Critical Accounting Estimates

Table of Contents

Valuation Allowances on Deferred Tax Assets

At each balance sheet date, we assess the need to establish a valuation allowance that reduces deferred tax assets
(including those generated from operations as well as those acquired in business combinations) when it is more
likely than not that all, or some portion, of the deferred tax assets will not be realized.

The determination of the need for a valuation allowance is based on all available information including

•

projections of future taxable income;

our forecast of future taxable income considers several factors, including actual net earnings in recent years,
future sustainability and likelihood of positive earnings; and

tax planning strategies.

Projections of future taxable income incorporate assumptions of future business and operations that may differ from
actual experience.

If our assumptions and estimates that resulted in our forecast of future taxable income prove to be incorrect, an
additional valuation allowance could become necessary, which could have a material adverse effect on our financial
condition.

From 2021 to 2022, we had an increase in our valuation allowance of $52 million, driven mostly by increase in our
DTA associated with unrealized investment losses and net operating loss carryforwards in the U.S. and U.K.
jurisdictions as we do not make a hold to recovery assertion on unrealized losses. In assessing the recoverability of
the DTA, we consider forecasts of future income for our U.S. business using assumptions about future
macroeconomic and company specific conditions and events. While our forecasts of future taxable income have
remained consistent, these forecasts are judgmental and involve a level of uncertainty, such that a 10% decrease to
forecasted future income could increase the valuation allowance by up to 8% or $15 million25.
Level 3 Fair Value Measurements

Level 3 Investments

We measure fair value using a standard hierarchy based on the quality of inputs used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Level 3 fair value measurements are based on unobservable inputs where there is little or no market activity. We
utilize unadjusted third party pricing sources and internal valuation models to determine these fair values. Our
assessment of the significance of these unobservable inputs to the fair value measurement requires judgement.

Our Level 3 investments consist primarily of privately held equity securities, and we value these securities using
observable and unobservable inputs. While the observable inputs are based on readily available market data, the
unobservable inputs involve increased uncertainty and judgement in their selection and application. Key drivers of
the valuation are the peer multiple and the expected term (in years). The peer multiple is calculated from a group of
peer companies and that multiple is then applied to the invested company as a key input to calculate the value. The
expected term is used in the option pricing model as a key input to calculate the value of the privately held equity
securities. The option pricing model is only used for one investment which has a more complex securities structure
that includes different liquidation preferences for each security class. We consider the following sensitivity a
reasonable deviation for this key input:

Sensitivity

Investments

Estimated Range in Variation

+/- 10% peer multiple

+/- 3 year exit term

(in millions of U.S. dollars)

294

190

+/- $29

+/- $22

For information on valuation allowances on deferred tax assets, refer to "Income Taxes" within Note 2 in our consolidated financial statements.

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Item 7 | Management Discussion and Analysis | Critical Accounting Estimates

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Fair Value Option - Insurance Contracts

We have elected to apply the fair value option for certain LPT reinsurance transactions that originated in 2017 and
2018. This is an irrevocable election that applies to all balances under the insurance contract, including reinsurance
recoverable and the liability for losses and LAE.

The fair value of the liability for losses and LAE and reinsurance recoverable under these contracts is presented
separately in our consolidated balance sheet as of December 31, 2022 and 2021. Changes in the fair value of the
liability for losses and LAE and reinsurance balances recoverable on paid and unpaid losses are included in net
incurred losses and LAE in our consolidated statement of operations.

We use an internal model to calculate the fair value of the liability for losses and LAE and reinsurance recoverable
asset for certain retroactive reinsurance contracts where we have elected the fair value option.

The fair value is calculated as the aggregate of discounted cash flows plus a risk margin.

The discounted cash flow approach uses:

estimated nominal cash flows based upon an appropriate payment pattern developed in accordance with
actuarial methods and

ii. a discount rate based upon high quality rated corporate bond yields plus a credit spread for non-performance
risk. The model uses corporate bond rates across the yield curve depending on the estimated timing of the
future cash flows and specific to the currency of the risk.

The risk margin was calculated using the present value of the cost of capital. The cost of capital approach uses

projected capital requirements,

ii. multiplied by the risk cost of capital representing the return required for non-hedgeable risk based upon the

weighted average cost of capital less investment income, and

iii. discounted using the weighted average cost of capital.

The fair value model uses a combination of observable and unobservable inputs in its use and application. While
the observable inputs are based on readily available market data, the unobservable inputs involve increased
uncertainty and judgement in their selection and application. Specifically, the risk margin calculated is dependent
on the following inputs:

a. Yield curve using high quality rated corporate bond rates across different currencies, notably the British Pound,

US dollar, and the Euro.

b. Weighted average cost of capital (“WACC”), which represents a proxy for the industry cost of capital, and is

calculated utilizing various inputs.

c. Average payout of the liabilities, which reflects the timing of expected future claim payments.

We consider the following sensitivity a reasonable deviation for these key assumptions26:

Net Fair Value Liabilities

Sensitivity

Estimated Range in Variation

(in millions of U.S. dollars)

1,011

+/- 50bps WACC

1,011

+/- 1 year in average payout

1,011

+/- 50bps yield curve

+/- $5

+/- $35

+/- $25

While the yield curve is an observable input since it is based on readily determinable corporate bond rates, it
generally has the biggest impact to the fair value in a given year apart from changes in loss estimates. At year-end
2022, there was a $219 million decrease in the liability due to an increase in the yield curve along with a $21 million
decrease in the liability due to a 0.45% increase in the credit spread for non-performance risk as credit spreads
have widened with the increase in yield curve.

The WACC remained unchanged from 2020 to 2022.

The observable and unobservable inputs used in the model are further described in Note 13 in our consolidated financial statements.

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Item 7 | Management Discussion and Analysis | Critical Accounting Estimates

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The average payout of the liability is adjusted every period to reflect actual net payments during the period and
expected future payments, and any acceleration or deceleration of the estimated payment pattern will impact the
average payout that would result in an impact to the value of the liability.

During 2022, there was an acceleration in the payment pattern, which decreased the average payout and resulted
in a $2 million increase to the liability.
Recently Issued Accounting Pronouncements Not Yet Adopted27

In August 2018, Financial Accounting Standards Board (“FASB”) issued ASU 2018-12, Financial Services—
Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.

The amendments are intended to improve the existing recognition, measurement, presentation, and disclosure
requirements for long-duration contracts issued by an insurance entity, and will require more frequent updating of
assumptions and a standardized discount rate for the future policy benefit liability.

Companies are required to apply the guidance as of and record transition adjustments from January 1, 2021
through to the date the standard is adopted, at which point the measurement impact is recognized. We will adopt
ASU 2018-12 effective January 1, 2023.

ITEM 6. RESERVED

See Note 2 to the consolidated financial statements for a more detailed discussion of ASU 2018-12, as well as newly adopted accounting
pronouncements.

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Table of Contents

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

The following risk management discussion and the estimated amounts generated from the sensitivity analysis
presented are forward-looking statements of market risk assuming certain market conditions occur. Future results
may differ materially from these estimated results due to, among other things, actual developments in the global
financial markets, changes in the composition of our investment portfolio or changes in our business strategies. The
results of the analysis we use to assess and mitigate risk are not projections of future events or losses. See
"Cautionary Statement Regarding Forward-Looking Statements" for additional information regarding our forward-
looking statements.

We are principally exposed to four types of market risk: interest rate risk; credit risk; equity price risk and foreign
currency risk. Our policies to address these risks in 2022 are not materially different than those used in 2021, and
based on our current knowledge and expectations, we do not currently anticipate significant changes in our market
risk exposures or in how we will manage those exposures in future reporting periods. However, due to the ongoing
uncertainty and volatility in financial markets as a result of continued inflationary pressure, ongoing disruptions and
decoupling of supply chains, geopolitical conflicts and tensions and various governmental responses thereto, we
expect interest rates, credit spreads and global equity markets to remain volatile in the near-term. Furthermore,
inflation and tightening of financial conditions by global central banks have increased the risk of defaults across
many industries. As a result, we continue to closely monitor market risk during this time.
Interest Rate and Credit Spread Risk

Interest rate risk is the price sensitivity of a security to changes in interest rates. Credit spread risk is the price
sensitivity of a security to changes in credit spreads. Our investment portfolio and funds held - directly managed
includes fixed maturity and short-term investments, whose fair values will fluctuate with changes in interest rates
and credit spreads. We attempt to maintain adequate liquidity in our fixed income securities portfolio with a strategy
designed to emphasize the preservation of our invested assets and provide sufficient liquidity for the prompt
payment of claims, contract liabilities and future policyholder benefits, as well as for settlement of commutation
payments. We also monitor the duration and structure of our investment portfolio.

The following tables, presented on a consolidated, Run-off and Legacy Underwriting business and Assumed Life
business basis, summarize the aggregate hypothetical change in fair value from an immediate parallel shift in the
treasury yield curve, assuming credit spreads remain constant in our fixed maturity and short-term investments
portfolio classified as trading and AFS, our funds held directly managed portfolio and our fixed income funds and our
fixed income exchange-traded funds, and excludes investments classified as held-for-sale:

Consolidated
Interest Rate Shift in Basis Points

As of December 31, 2022

-100

-50

—

+50

+100

Total Market Value (1)
Market Value Change from Base

Change in Unrealized Value

As of December 31, 2021
Total Market Value (1)
Market Value Change from Base
Change in Unrealized Value

(in millions of U.S. dollars)

$ 10,794

$ 10,513

10,246 $ 9,993

$ 9,755

5.3 %

2.6 %

—

(2.5) %

(4.8) %

548

267

— $

(253)

(491)

-100

-50

—

+50

+100

$ 14,601

$ 14,182

13,796 $ 13,438

$ 13,099

5.8 %

2.8 %

—

(2.6) %

(5.1) %

805

386

— $

(358)

(697)

(1) Excludes equity exchange-traded funds of $439 million and $373 million for the years ended December 31, 2022 and 2021, respectively, which

are included in the Equity Price Risk section below.

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Item 7A | Quantitative and Qualitative Disclosures About Market Risk

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As of December 31, 2022

-100

-50

—

+50

+100

Run-off and Legacy Underwriting

Interest Rate Shift in Basis Points

Total Market Value (1)
Market Value Change from Base

Change in Unrealized Value

As of December 31, 2021
Total Market Value (1)
Market Value Change from Base

Change in Unrealized Value

(in millions of U.S. dollars)

9,773

9,550

9,338

9,136

8,945

4.7 %

2.3 %

— %

(2.2) %

(4.2) %

435

212

—

(202)

(393)

-100

-50

—

+50

+100

$ 12,959

$ 12,638

$ 12,342

$ 12,066

$ 11,803

5.0 %

2.4 %

— %

(2.2) %

(4.4) %

617

296

—

(276)

(539)

(1) Excludes equity exchange-traded funds of $439 million and $373 million as of December 31, 2022 and December 31, 2021, respectively,

which are included in the Equity Price Risk section below.

As of December 31, 2022

-100

-50

—

+50

+100

Assumed Life

Interest Rate Shift in Basis Points

Total Market Value

Market Value Change from Base

Change in Unrealized Value

As of December 31, 2021

Total Market Value

Market Value Change from Base

Change in Unrealized Value

(in millions of U.S. dollars)

1,021

963

908

857

810

12.4 %

6.1 %

— %

(5.6) %

(10.8) %

113

—

(51)

(98)

-100

-50

—

+50

+100

1,642

1,544

1,454

1,372

1,296

12.9 %

6.2 %

— %

(5.6) %

(10.9) %

188

—

(82)

(158)

Actual shifts in interest rates may not change by the same magnitude across the maturity spectrum or on an
individual security and, as a result, the impact on the fair value of our fixed maturity securities, short-term
investments, funds held - directly managed, fixed income funds and fixed income exchange-traded funds may be
materially different from the resulting change in value indicated in the tables above.

The following tables, presented on a consolidated, Run-off and Legacy Underwriting business and Assumed Life
business basis, summarize the aggregate hypothetical change in fair value from an immediate parallel shift in credit
spreads assuming interest rates remain fixed, in our fixed maturity and short-term investments portfolio classified as
trading and AFS, our funds held directly managed portfolio, our fixed income funds and our fixed income exchange-
traded funds, and excludes investments classified as held-for-sale:

As of December 31, 2022

-100

-50

—

+50

+100

Credit Spread Shift in Basis Points

Total Market Value (1)
Market Value Change from Base

Change in Unrealized Value

As of December 31, 2021
Total Market Value (1)
Market Value Change from Base

Change in Unrealized Value

(in millions of U.S. dollars)

$ 10,797

5.4 %

$ 10,515

$
2.6 %

551

269

10,246 $
—
— $

9,991

9,749

(2.5) %

(4.9) %

(255)

(497)

-100

-50

—

+50

+100

$ 14,560

5.5 %

$ 14,166

$
2.7 %

764

370

13,796 $ 13,448

$ 13,119

—
— $

(2.5) %

(4.9) %

(348)

(677)

(1) Excludes equity exchange-traded funds of $439 million and $373 million for the years ended December 31, 2022 and December 31, 2021,

respectively, which are included in the Equity Price Risk section below.

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Run-off and Legacy Underwriting

Credit Spread Shift in Basis Points

As at December 31, 2022

-100

-50

—

+50

+100

(in millions of U.S. dollars)

Total Market Value (1)
Market Value Change from Base

Change in Unrealized Value

As at December 31, 2021
Total Market Value (1)
Market Value Change from Base

Change in Unrealized Value

9,771

9,550

9,338

9,136

8,943

4.6 %

2.3 %

— %

(2.2) %

433

212

—

(202)

(4.2) %

(395)

-100

-50

—

+50

+100

12,935

12,630

12,342

12,070

11,811

4.8 %

2.3 %

— %

(2.2) %

593

288

—

(272)

(4.3) %

(531)

(1) Excludes equity exchange-traded funds of $439 million and $373 million as of December 31, 2022 and December 31, 2021, respectively,

which are included in the Equity Price Risk section below.

As at December 31, 2022

-100

-50

—

+50

+100

Assumed Life

Credit Spread Shift in Basis Points

Total Market Value

Market Value Change from Base

Change in Unrealized Value

As at December 31, 2021

Total Market Value

Market Value Change from Base

Change in Unrealized Value

Credit Risk

(in millions of U.S. dollars)

1,026

965

908

855

806

13.0 %

6.3 %

— %

(5.8) %

118

—

(53)

(11.2) %

(102)

-100

-50

—

+50

+100

1,625

1,536

1,454

1,378

1,308

11.8 %

5.6 %

— %

(5.2) %

171

—

(76)

(10.0) %

(146)

Credit risk relates to the uncertainty of a counterparty’s ability to make timely payments in accordance with
contractual terms of the instrument or contract. We are exposed to direct credit risk primarily within our portfolios of
fixed maturity and short-term investments, through customers, brokers and reinsurers in the form of premiums
receivable and reinsurance balances recoverable on paid and unpaid losses, respectively, and through ceding
companies who retain premium owed to us as collateral for the payment of claims, each as discussed below.
Fixed Maturity and Short-Term Investments

As a holder of $9.6 billion of fixed maturity and short-term investments, we also have exposure to credit risk as a
result of investment ratings downgrades or issuer defaults. In an effort to mitigate this risk, our investment portfolio
consists primarily of investment grade-rated, liquid, fixed maturity investments of short-to-medium duration. At
December 31, 2022, 36.9% of our fixed maturity and short-term investment portfolio was rated AA or higher by a
major rating agency (December 31, 2021: 38.6%) with 6.5% rated lower than BBB- or non-rated (December 31,
2021: 5.6%). The portfolio as a whole, including cash, restricted cash, fixed maturity and short term investments and
funds held - directly managed, had an average credit quality rating of A+ as of December 31, 2022 (December 31,
2021: A+). In addition, we manage our portfolio pursuant to guidelines that follow what we believe are prudent
standards of diversification. The guidelines limit the allowable holdings of a single issue and issuers and, as a result,
we believe we do not have significant concentrations of credit risk.

A summary of our fixed maturity and short-term investments by credit rating is as follows:

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Credit rating

2022

2021

Change

AAA

BBB

Non-investment grade

Not rated

Total

Average credit rating

23.3 %

13.6 %

33.4 %

23.2 %

6.0 %

0.5 %

100.0 %

A+

(0.2) %

(1.5) %

3.2 %

(2.4) %

0.7 %

0.2 %

23.5 %

15.1 %

30.2 %

25.6 %

5.3 %

0.3 %

100.0 %

A+

Reinsurance Balances Recoverable on Paid and Unpaid Losses

We have exposure to credit risk as it relates to our reinsurance balances recoverable on paid and unpaid losses.
Our (re)insurance subsidiaries remain liable to the extent that retrocessionaires do not meet their contractual
obligations and, therefore, we evaluate and monitor concentration of credit risk among our reinsurers28.
Funds Held

Under funds held arrangements, the reinsured company has retained funds that would otherwise have been
remitted to our reinsurance subsidiaries. The funds held balance is credited with investment income and losses
payable are deducted. We are subject to credit risk if the reinsured company is unable to honor the value of the
funds held balances, such as in the event of insolvency. Our funds held are shown under two categories on the
consolidated balance sheets, where funds held upon which we receive the underlying portfolio investment returns
are shown as "Funds held - directly managed", and funds held where we receive a fixed crediting rate or other
contractually agreed return are shown as "Funds held by reinsured companies". Both types of funds held are
subject to credit risk. We routinely monitor the creditworthiness of reinsured companies with whom we have funds
held arrangements. As of December 31, 2022, we had funds held concentrations to reinsured companies exceeding
10% of shareholders’ equity of $5.0 billion (December 31, 2021: $4.4 billion) in aggregate. However, we generally
have the contractual ability to offset any shortfall in the payment of the funds held balances with amounts owed by
us to the reinsured for losses payable and other amounts contractually due.
Equity Price Risk

Our portfolio of equity investments, excluding our fixed income exchange-traded funds but including the equity
funds, has exposure to equity price risk, which is the risk of potential loss in fair value resulting from adverse
changes in stock prices. Our fixed income exchange-traded funds are excluded from the below analysis and have
been included within the interest rate and credit spread risk analysis above, as these exchange-traded funds are
part of our fixed income investment strategy and are backed by fixed income instruments. The following table
summarizes the aggregate hypothetical change in fair value from a 10% decline in the overall market prices of our
equities at risk:

2022

2021

Change

(in millions of U.S. dollars)

Publicly traded equity investments in common and preferred stocks

385 $

281 $

Privately held equity investments in common and preferred stocks

Private equity funds

Equity funds
Equity exchange traded funds

Fair value of equities at risk

Impact of 10% decline in fair value

358

1,282

3
439

372

752

5
373

2,467 $

1,783 $

247 $

178 $

104

(14)

530

(2)
66

684

28 A discussion of our reinsurance balances recoverable on paid and unpaid losses is in Note 8 in our consolidated financial statements.

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Hedge Funds

As of December 31, 2022, we had investments of $549 million (December 31, 2021: $291 million) in hedge funds,
included within our other investments, at fair value, that have exposure to interest rate, credit spread, and equity
price risk given the underlying assets in those funds.

As of December 31, 2022 and 2021, the impact of a 10% decline in the fair value of these investments would have
been $55 million and $29 million, respectively.

Convertible Bonds

As of December 31, 2022, we had investments of $233 million (December 31, 2021: $223 million) in convertible
bonds, included within our fixed income portfolio, that have exposure to equity price risk given the embedded
derivatives in those investments.

As of December 31, 2022, a 10% decline in the underlying equity prices would result in a $8 million (December 31,
2021: $11 million) decline in the fair value of these investments. The sensitivity of the convertible bonds to interest
rate and credit spread shocks have been included in the interest rate and credit spread analysis above.
Foreign Currency Risk

The table below summarizes our net exposures as of December 31, 2022 and 2021 to foreign currencies:

As of December 31, 2022

Total net foreign currency exposure
Pre-tax impact of a 10% movement in USD(1)

As of December 31, 2021

Total net foreign currency exposure
Pre-tax impact of a 10% movement in USD(1)

(1) Assumes 10% change in U.S. dollar relative to other currencies.

AUD

CAD

EUR

GBP

Other

Total

(in millions of U.S. dollars)

17 $

2 $

7 $

(314) $

1 $

(31) $

96 $

10 $

29 $

(164)

3 $

(16)

(6) $

(10) $

15 $

16 $

(1) $

2 $

(3) $

— $

Through our subsidiaries located in various jurisdictions, we conduct our (re)insurance operations in a variety of
non-U.S. currencies. We have the following exposures to foreign currency risk:

•

Transaction Risk: The functional currency for the majority of our subsidiaries is the U.S. dollar. Within these
entities, any fluctuations in foreign currency exchange rates relative to the U.S. dollar has a direct impact on the
valuation of our assets and liabilities denominated in other currencies. All changes in foreign exchange rates,
with the exception of non-U.S. dollar AFS investments, are recognized in our consolidated statements of
earnings. Changes in foreign exchange rates relating to non-U.S. dollar AFS investments are recorded in AOCI
in shareholders’ equity. Our subsidiaries with non-U.S. dollar functional currencies are also exposed to
fluctuations in foreign currency exchange rates relative to their own functional currency.

Translation Risk: We have net investments in certain European, British, and Australian subsidiaries whose
functional currencies are the Euro, British pound and Australian dollar, respectively. The foreign exchange gain
or loss resulting from the translation of their financial statements from their respective functional currency into
U.S. dollars is recorded in the cumulative translation adjustment account, which is a component of AOCI in
shareholders’ equity.

Our foreign currency policy is to broadly manage, where possible, our foreign currency risk by:

•

Seeking to match our liabilities under (re)insurance policies that are payable in foreign currencies with assets
that are denominated in such currencies, subject to regulatory constraints.

Selectively utilizing foreign currency forward contracts to mitigate foreign currency risk.

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We use foreign currency forward exchange rate contracts to manage foreign currency risk. To the extent our foreign
currency exposure is not matched or hedged, we may experience foreign exchange losses or gains, which would be
reflected in our consolidated results of operations and financial condition.

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106

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

Table of Contents

CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID 238) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

108

Report of Independent Registered Public Accounting Firm (on the 2021 and 2020 consolidated financial statements)
(PCAOB ID 1297) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Earnings for the years ended December 31, 2022, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020 . . . . . . . .

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2022, 2021 and
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 . . . . . . . . . . . . . . . . . . .

Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Note 1 - Basis of Presentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 2 - Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 3 - Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 4 - Business Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 5 - Divestitures, Held-for-Sale Businesses and Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 6 - Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 7 - Derivatives and Hedging Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 8 - Reinsurance Balances Recoverable on Paid and Unpaid Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 9 - Deferred Charge Assets and Deferred Gain Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 10 - Losses and Loss Adjustment Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 11 - Future Policyholder Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 12 - Defendant Asbestos and Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 13 - Fair Value Measurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 14 - Variable Interest Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 15 - Premiums Written and Earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 16 - Goodwill and Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 17 - Debt Obligations and Credit Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 18 - Noncontrolling Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 19 - Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 20 - Earnings per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 21 - Share-Based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 22 - Income Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 23 - Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 24 - Dividend Restrictions and Statutory Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 25 - Commitments and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 26 - Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 27 - Unaudited Condensed Quarterly Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULES

I. Summary of Investments Other than Investments in Related Parties as of December 31, 2022 . . . . . . . . . . . . . . . . . . . .

II. Condensed Financial Information of Registrant as of December 31, 2022 and 2021 and for the years ended
December 31, 2022, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

III. Supplementary Insurance Information as of December 31, 2022 and 2021 and for the years ended December 31,
2022, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IV. Reinsurance for the years ended December 31, 2022, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

V. Valuation and Qualifying Accounts for the years ended December 31, 2022, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . .

VI. Supplementary Information Concerning Property/Casualty Insurance Operations as of and for the years ended
December 31, 2022, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

111

114

115

116

117

118

120

120
121
132
136
138
141
151
152
154
159
193
194
197
207
209
209
210
213
214
218
219
223
227
233
237
239
241

242

243

246

247

248

249

Schedules other than those listed above are omitted as they are not applicable or the information has been included in
the consolidated financial statements, notes thereto, or elsewhere herein.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Enstar Group Limited

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Enstar Group Limited and its subsidiaries (the
“Company”) as of December 31, 2022, and the related consolidated statements of earnings, of comprehensive
income, of changes in shareholders’ equity, and of cash flows for the year then ended, including the related notes
and schedules of summary of investments other than investments in related parties (Schedule I) as of December
31, 2022, condensed financial information of registrant (Schedule II), supplementary insurance information
(Schedule III), and supplemental information concerning property/casualty insurance operations (Schedule VI) as of
December 31, 2022 and for the year then ended, and reinsurance (Schedule IV) and valuation and qualifying
accounts (Schedule V) for the year ended December 31, 2022 listed in the accompanying index (collectively
referred to as the “consolidated financial statements”). We also have audited the Company's internal control over
financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for
the year then ended in conformity with accounting principles generally accepted in the United States of America.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.

Change in Accounting Principle

As discussed in Notes 2(b) and 9 to the consolidated financial statements, the Company changed the manner in
which it accounts for the amortization of deferred charge assets and deferred gain liabilities in 2022.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in Management's Annual Report on Internal Control over Financial Reporting appearing under
Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the
Company's internal control over financial reporting based on our audit. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting
was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance

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with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that (i)
relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.

Valuation of losses and loss adjustment expenses (including those at fair value)

As described in Notes 2, 10 and 13 to the consolidated financial statements, the Company has $11.7 billion of
liabilities for losses and loss adjustment expenses and $1.3 billion of liabilities for losses and loss adjustment
expenses, at fair value, as of December 31, 2022. The liability for losses and loss adjustment expenses, also
referred to as loss reserves, represents management’s gross estimates before reinsurance for unpaid reported
losses and includes losses that have been incurred but not yet reported using actuarial methods. Management
performs an analysis of loss reserves by each portfolio that the Company has acquired. Exposures are separated
into homogenous reserving classes, generally lines of business, within each portfolio. As disclosed by management,
considerable judgment is used in the process of developing estimates of loss reserves, which involves uncertainty in
several areas, including use of actual or industry data for model inputs, and various projection assumptions and
judgments depending on product lines, coverage type, or policy year. Several actuarial methods may be used in
analyzing and projecting potential reserve positions, and a mix of methods may be considered to form an aggregate
reserve position for each portfolio. For loss reserves reported at fair value, the fair value is calculated as the
aggregate of discounted cash flow plus a risk margin. The discounted cash flow approach uses estimated nominal
cash flows based upon a payment pattern developed in accordance with actuarial methods and a discount rate
based upon a high quality rated corporate bond yield plus a credit spread for non-performance risk. Key
assumptions are made within each actuarial method, including loss development factors and expected loss ratios.
In addition, in developing loss reserves for insurance claims with asbestos and environmental exposures, traditional
actuarial methods cannot be used and therefore alternative actuarial methods are employed by management,
including the asbestos ground-up exposure analysis (frequency-severity) method. Management uses a combination
of additional actuarial methods, including the paid survival ratio, paid market share, and decay factor, among others,
to periodically reevaluate the continued reasonableness of recorded loss reserves for these exposures. These
methods involve the use of assumptions relating to expected future annual average payment amounts, paid survival
ratios, estimated market share, and decay factors. Judgment is applied by management in evaluating the mix of
methods selected to form an aggregate reserve position for each portfolio.

The principal considerations for our determination that performing procedures relating to the valuation of losses and
loss adjustment expenses (including those at fair value) is a critical audit matter are (i) the significant judgment by
management when developing the estimate of loss reserves, (ii) a high degree of auditor judgment, subjectivity and
effort in performing procedures and evaluating management’s significant assumptions related to the loss
development factors, expected loss ratios, and selected aggregate reserve position for each portfolio for non-
asbestos and environmental loss reserves, and expected future annual average payment amounts, paid survival
ratios, estimated market share, decay factors, and the mix of methods selected to form an aggregate reserve
position for asbestos and environmental loss reserves, and (iii) the audit effort involved the use of professionals with
specialized skill and knowledge.

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basis, and (ii) comparing the independent estimate to management’s actuarial determined reserves to evaluate the
reasonableness of management’s estimate. Developing the independent estimate involved, on a test basis (i)
independently developing the significant assumptions using actual historical data and loss development patterns, as
well as industry data and other benchmarks, for the respective reserving classes, and (ii) testing the completeness
and accuracy of data provided by management. For certain other reserving classes, professionals with specialized
skill and knowledge were used to assist in testing management’s process on a sample basis. Testing management’s
process included evaluating the reasonableness of the significant assumptions, the appropriateness of the actuarial
methods used, and testing the completeness and accuracy of data used by management.

Valuation of defendant asbestos liabilities

As described in Notes 2 and 12 to the consolidated financial statements, the Company has $607 million of
defendant asbestos and environmental liabilities as of December 31, 2022, substantially all of which consists of
defendant asbestos liabilities. Defendant asbestos liabilities include amounts for indemnity and defense costs for
pending and future asbestos-related claims, determined by management using actuarial methods. The actuarial
methods utilize data resulting from claims experience and include the development of estimates of the potential
value of asbestos-related claims asserted but not yet resolved, as well as the number and potential value of
asbestos-related claims not yet asserted. In developing the estimate of liability for potential future claims, the
actuarial methods project the potential number of future claims based on historical claim filings and health studies.
The actuarial methods also utilize assumptions based on the Company’s historical proportion of claims resolved
without payment, historical claim resolution costs for those claims that result in a payment, and historical defense
costs. The liabilities are estimated by management using pending and projected future claim filings, projected
payment rates, average claim resolution amounts, and estimated defense costs, which are derived based on
assumptions relating to defense cost to indemnity cost ratios. Management utilizes judgment when determining the
assumptions related to projected future claim filings, projected payment rates, and estimated defense costs.

The principal considerations for our determination that performing procedures relating to the valuation of defendant
asbestos liabilities is a critical audit matter are (i) the significant judgment by management when developing the
estimate of the liability, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and
evaluating management’s significant assumptions related to future claim filings, average claim resolution amounts,
and defense cost to indemnity cost ratios, and (iii) the audit effort involved the use of professionals with specialized
skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to the valuation of defendant asbestos liabilities, including controls over the development of
significant assumptions. These procedures also included, among others, the involvement of professionals with
specialized skill and knowledge to assist in testing management’s process relating to the valuation of defendant
asbestos liabilities, which included evaluating the reasonableness of the significant assumptions and the
appropriateness of the actuarial methods used. Testing management’s process also included testing the
completeness and accuracy of data used by management on a sample basis.

/s/ PricewaterhouseCoopers LLP

New York, New York
March 1, 2023

We have served as the Company’s auditor since 2022.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Enstar Group Limited:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Enstar Group Limited and subsidiaries (the
Company) as of December 31, 2021, the related consolidated statements of earnings, comprehensive income,
changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31,
2021, and the related notes and financial statement schedules I to VI (collectively, the consolidated financial
statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2021, and the results of its operations and its cash flows for each of
the years in the two-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting
principles.

Change in Accounting Principle

As discussed in Notes 2(b) and 9 to the consolidated financial statements, the Company has elected to change its
method of accounting for deferred charge assets as of January 1, 2020.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the
risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our
opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.

Assessment of the estimate of loss reserves and asbestos and environmental liabilities

As discussed in Notes 1, 2(e), 2 (g), 10 and 12 to the consolidated financial statements, the Company has
recorded a liability for loss and loss adjustment expenses (loss reserves) and defendant asbestos and
environmental liabilities (asbestos and environmental liabilities) of $11,269 million and $638 million, respectively,
as of December 31, 2021. Loss reserves include an amount determined from reported claims and an amount,
based on historical loss experience and industry statistics, for losses incurred but not reported. Asbestos and
environmental liabilities include amounts for indemnity and defense costs for pending and future claims, as well
as estimated clean-up costs based on engineering reports. The Company establishes loss reserves and
asbestos and environmental liabilities primarily based on actuarially determined estimates of ultimate losses
and loss adjustment expenses, with the assistance of actuarial specialists.

We identified the assessment of the estimate of loss reserves and asbestos and environmental liabilities as a
critical audit matter. The evaluation of the estimate of loss reserves involved a high degree of auditor judgment
due to the inherent uncertainty that exists in the losses incurred but not yet reported amounts, the outcome of
coverage disputes on certain lines of business, and the significant amount of time that can lapse between the

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assumption of risk and ultimate payment of the claim. The evaluation of the estimate of asbestos and
environmental liabilities involved a high degree of auditor judgment due to the inherent uncertainty that exists in
estimating the number and potential value of claims asserted, but not yet resolved and claims not yet asserted.
The key assumptions used in the estimation process for loss reserves included loss development factors,
expected loss ratios, and expected trends in claim frequency and severity. The key assumptions used in the
estimation process for asbestos and environmental liabilities included expected trends in claim frequency and
severity. Specialized skills and knowledge were required to evaluate the actuarial methodologies and the key
assumptions used to estimate loss reserves and asbestos and environmental liabilities.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls over the Company’s process to
estimate the loss reserves and asbestos and environmental liabilities. This included controls over the
assumptions listed above and actuarial methodologies used in the estimation of loss reserves and asbestos and
environmental liabilities. We involved actuarial professionals with specialized skills and knowledge, who
assisted in:

•

comparing the methodologies and assumptions used by the Company in estimating loss reserves and
asbestos and environmental liabilities with generally accepted actuarial methodologies;

evaluating assumptions for loss development factors, expected loss ratios, and expected trends in claim
frequency and severity used in the estimation process of loss reserves by comparing them to historical
results and industry trends;

evaluating assumptions for expected trends in claim frequency and severity used in the estimation process
of asbestos and environmental liabilities by comparing them to historical results and industry trends;

developing an independent actuarial estimate of loss reserves and asbestos and environmental liabilities for
selected lines of business;

examining the Company’s internal or independent external actuarial analyses for the remaining lines of
business by 1) analyzing claims development in the current year; and 2) evaluating changes in
methodologies and assumptions from the prior year;

assessing the movement of the recorded loss reserves within the Company’s range of actuarially
determined reserves; and

assessing the movement of the recorded asbestos and environmental liabilities within the Company’s range
of actuarially determined reserves.

Liability for loss and loss adjustment expenses, fair value

As discussed in Notes 1, 2(e), 10 and 13 to the consolidated financial statements, the Company used a
discounted cash flow approach to estimate the liability for loss and loss adjustment expenses, fair value. The
discounted cash flow approach uses estimated nominal cash flows based on a payment pattern developed in
accordance with standard actuarial techniques. Nominal loss reserves include an amount determined from
reported claims and an amount, based on historical loss experience and industry statistics, for losses incurred
but not reported. The Company establishes nominal loss reserves primarily based on actuarially determined
estimates of ultimate loss and loss adjustment expenses, with the assistance of actuarial specialists. The
Company has recorded a liability for loss and loss adjustment expenses, fair value (loss reserves at fair value)
of $1,989 million as of December 31, 2021.

We identified the assessment of loss reserves at fair value as a critical audit matter. The evaluation of the
estimate of nominal loss reserves involved a high degree of auditor judgment due to the inherent uncertainty
that exists in the losses incurred but not yet reported amounts, the outcome of coverage disputes on certain
lines of business, and the significant amount of time that can lapse between the assumption of risk and ultimate
payment of the claim. The key assumptions used in the estimation process included loss development factors
and expected trends in claim frequency and severity. Specialized skills and knowledge were required to 1)
evaluate the actuarial methodologies and certain assumptions used to estimate nominal loss reserves; and 2)
evaluate the projected payout, including timing and amount of the nominal cash flows used in the fair value
estimate.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls over the Company’s process to
estimate nominal loss reserves. This included controls over the assumptions and actuarial methodologies used
in the 1) estimation of nominal loss reserves; and 2) the estimation of the projected payout, including timing and

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amount of the nominal cash flows used to develop the fair value. We involved actuarial professionals with
specialized skills and knowledge, who assisted in:

•

comparing the methodologies and assumptions used by the Company in estimating nominal loss reserves
with generally accepted actuarial methodologies;

comparing assumptions for loss development factors and expected trends in claim frequency and severity
to historical results and industry trends;

developing an independent actuarial estimate of nominal loss reserves for selected lines of business;

examining the Company’s internal and independent external actuarial analyses for the remaining lines of
business by 1) analyzing claims development in the current year; and 2) evaluating changes in
methodologies and assumptions from the prior year;

evaluating the Company’s overall nominal loss reserves and assessing the movement of nominal loss
reserves within the Company’s range of actuarially determined reserves;

evaluating the projected payout, including timing, and amount of the nominal cash flows used to develop the
fair value, by developing an independent projected payout for selected lines of business; and

examining the Company’s projected payout for the remaining lines of business by evaluating changes in the
timing of the nominal cash flows from the prior year and evaluating changes in methodologies and
assumptions from the prior year.

/s/ KPMG Audit Limited

KPMG Audit Limited

We served as the Company’s auditor from 2012 to 2022.
Hamilton, Bermuda
February 24, 2022, except as to changes to deferred charge assets as described in Notes 2(b) and 9, which is as of
March 1, 2023.

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113

ENSTAR GROUP LIMITED
CONSOLIDATED BALANCE SHEETS
As of December 31, 2022 and 2021

Table of Contents

2022

2021

(expressed in millions of U.S.
dollars, except share data)

ASSETS
Short-term investments, trading, at fair value

14 $

Short-term investments, available-for-sale, at fair value (amortized cost: 2022 — $37; 2021 — $34)
Fixed maturity securities, trading, at fair value
Fixed maturity securities, available-for-sale, at fair value (amortized cost: 2022 — $5,871; 2021 — $5,689; net
of allowance: 2022 — $33; 2021 — $10)
Funds held - directly managed, at fair value
Equity securities, at fair value (cost: 2022 — $1,357; 2021 — $1,831)
Other investments, at fair value (includes $3 in 2022 of consolidated variable interest entities)
Equity method investments
Total investments (Note 6 and (Note 13)
Cash and cash equivalents
Restricted cash and cash equivalents
Reinsurance balances recoverable on paid and unpaid losses (net of allowance: 2022 — $131; 2021 — $136)
(Note 8)
Reinsurance balances recoverable on paid and unpaid losses, at fair value (Note 8 and (Note 13)
Insurance balances recoverable (net of allowance: 2022 — $5; 2021 — $5) (Note 12)
Funds held by reinsured companies (Note 6)
Net deferred charge assets (Note 9)
Other assets
TOTAL ASSETS
LIABILITIES
Losses and loss adjustment expenses (Note 10)
Losses and loss adjustment expenses, at fair value (Note 10) and (Note 13)
Future policyholder benefits (Note 11)
Defendant asbestos and environmental liabilities (Note 12)
Insurance and reinsurance balances payable
Debt obligations (Note 17)
Other liabilities
TOTAL LIABILITIES
COMMITMENTS AND CONTINGENCIES (Note 25)
REDEEMABLE NONCONTROLLING INTERESTS (Note 18)
SHAREHOLDERS’ EQUITY (Note 19)
Ordinary Shares (par value $1 each, issued and outstanding 2022: 17,588,050; 2021: 18,223,574):

Voting Ordinary Shares (issued and outstanding 2022: 15,990,338; 2021: 16,625,862)
Non-voting convertible ordinary Series C Shares (issued and outstanding 2022: 1,192,941; 2021: 1,192,941)
Non-voting convertible ordinary Series E Shares (issued and outstanding 2022: 404,771 and 2021: 404,771)

Preferred Shares:

Series C Preferred Shares (issued and held in treasury 2022 and 2021: 388,571)
Series D Preferred Shares (issued and outstanding 2022 and 2021: 16,000; liquidation preference $400)
Series E Preferred Shares (issued and outstanding 2022 and 2021: 4,400; liquidation preference $110)

Treasury shares, at cost (Series C Preferred Shares 2022 and 2021: 388,571)
Joint Share Ownership Plan (voting ordinary shares, held in trust 2022 and 2021: 565,630)
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total Enstar Shareholders’ Equity
Noncontrolling interests (Note 18)
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY

See accompanying notes to the consolidated financial statements

38
2,370

5,223
2,040
1,250
3,296
397
14,628
822
508

856
275
177
3,582
658
648
22,154 $

11,721 $

1,286
1,184
607
100
1,829
462
17,189

34
3,756

5,652
3,007
1,995
2,333
493
17,276
1,646
446

1,085
432
213
2,340
598
620
24,656

11,269
1,989
1,502
638
254
1,691
581
17,924

168

179

16
1
—

—
400
110
(422)
(1)

766
(575)
4,406
4,701
96
4,797

22,154 $

17
1
—

—
400
110
(422)
(1)
922
(16)
5,312
6,323
230
6,553
24,656

Enstar Group Limited | 2022 Form 10-K

114

ENSTAR GROUP LIMITED
CONSOLIDATED STATEMENTS OF EARNINGS
For the Years Ended December 31, 2022, 2021 and 2020

INCOME

Net premiums earned

Net investment income

Net realized (losses) gains

Net unrealized (losses) gains

Other income

Net gain on purchase and sales of subsidiaries

Total income

EXPENSES

Net incurred losses and loss adjustment expenses

Current Period

Prior Period

Total net incurred losses and loss adjustment expenses

Policyholder benefit expenses

Amortization of net deferred charge assets

Acquisition costs

General and administrative expenses

Interest expense

Net foreign exchange (gains) losses

Total expenses

(LOSS) EARNINGS BEFORE INCOME TAXES

Income tax benefit (expense)

(Losses) earnings from equity method investments

NET (LOSS) EARNINGS FROM CONTINUING OPERATIONS

Net earnings from discontinued operations, net of income taxes

NET (LOSS) EARNINGS

Net loss (earnings) attributable to noncontrolling interest

NET (LOSS) EARNINGS ATTRIBUTABLE TO ENSTAR

Dividends on preferred shares

Table of Contents

2022

2021

2020

(expressed in millions of U.S.
dollars, except share and per share data)

66 $

245 $

455

(135)

(1,479)

—

(1,058)

(756)

(708)

331

(15)

(175)

(883)

(74)

(945)

—

(945)

(870)

(36)

312

(61)

178

789

172

(403)

(231)

(3)

367

(12)

302

487

(27)

553

—

553

(15)

538

(36)

572

303

1,623

140

2,660

405

(32)

373

—

171

502

1,160

1,500

(24)

239

1,715

1,731

1,759

(36)

NET (LOSS) EARNINGS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS

(906) $

502 $

1,723

(Loss) earnings per ordinary share attributable to Enstar:

Basic:

Net (loss) earnings from continuing operations

Net earnings from discontinued operations

Net (loss) earnings per ordinary share

Diluted:

Net (loss) earnings from continuing operations

Net earnings from discontinued operations

Net (loss) earnings per ordinary share

Weighted average ordinary shares outstanding:

Basic

Diluted

(52.65) $

25.33 $

—

(52.65) $

25.33 $

(52.65) $

24.94 $

—

(52.65) $

24.94 $

79.60

0.35

79.95

78.62

0.35

78.97

17,207,229

19,821,259

21,551,408

17,323,130

20,127,131

21,818,294

See accompanying notes to the consolidated financial statements

Enstar Group Limited | 2022 Form 10-K

115

ENSTAR GROUP LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2022, 2021 and 2020

Table of Contents

2022

2021

2020

(expressed in millions of U.S. dollars)

NET (LOSS) EARNINGS

(945) $

553 $

1,731

Other comprehensive (loss) income, net of income taxes:
Unrealized (losses) gains on fixed maturity available-for-sale
investments arising during the year
Reclassification adjustment for change in allowance for credit losses
recognized in net (loss) earnings
Reclassification adjustment for net realized losses (gains) included in net
(loss) earnings
Reclassification to net (loss) earnings on disposal of subsidiary
Unrealized (losses) gains arising during the year, net of reclassification
adjustments

Change in currency translation adjustment

Other

Total other comprehensive (loss) income

(681)

(106)

105

81
—

(6)
—

(572)

(102)

—

(2)

(574)

(98)

(1)

(18)
(12)

(2)

Comprehensive (loss) income

Comprehensive loss (income) attributable to noncontrolling interest

(1,519)

455

(15)

1,804

COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO ENSTAR

(1,429) $

440 $

1,832

See accompanying notes to the consolidated financial statements

Enstar Group Limited | 2022 Form 10-K

116

ENSTAR GROUP LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the Years Ended December 31, 2022, 2021 and 2020

Table of Contents

Share Capital — Voting Ordinary Shares

Balance, beginning of year

Issue of shares
Shares repurchased

Balance, end of year

Share Capital — Non-Voting Convertible Ordinary Series C Shares

Balance, beginning of year
Shares repurchased

Balance, end of year

Share Capital — Non-Voting Convertible Ordinary Series E Shares

Balance, beginning of year
Shares repurchased

Balance, end of year

Share Capital - Series C Convertible Participating Non-Voting Preferred Shares

Balance, beginning and end of year

Share Capital - Series D Preferred Shares

Balance, beginning and end of year

Share Capital - Series E Preferred Shares

Balance, beginning and end of year
Treasury Shares (Series C Preferred Shares)
Balance, beginning and end of year

Joint Share Ownership Plan — Voting Ordinary Shares, Held in Trust

Balance, beginning of year

Issue of shares
Balance, end of year
Additional Paid-in Capital

Balance, beginning of year

Repurchase of voting ordinary shares
Shares repurchased
Amortization of share-based compensation

Balance, end of year

Accumulated Other Comprehensive (Loss) Income

Balance, beginning of year

Cumulative currency translation adjustment

Balance, beginning of year

Change in currency translation adjustment

Balance, end of year

Defined benefit pension liability
Balance, beginning of year

Change in defined benefit pension liability

Balance, end of year

Unrealized (losses) gains on available-for-sale investments

Balance, beginning of year

Change in unrealized (losses) gains on available-for-sale investments

Balance, end of year

Retained Earnings

Balance, beginning of year

Net (loss) earnings
Net loss (earnings) attributable to noncontrolling interests
Dividends on preferred shares
Change in redemption value of redeemable noncontrolling interests

Cumulative effect of change in accounting principle - amortization of deferred charge assets (Note 9)
Cumulative effect of change in accounting principle - expected credit losses (1)

Balance, end of year

Noncontrolling Interests (excludes redeemable noncontrolling interests)

Balance, beginning of year

Increase due to acquisition
Dividends paid
Net loss attributable to noncontrolling interests

Change in unrealized losses on available-for-sale investments attributable to noncontrolling interests

Balance, end of year

Total Shareholders’ Equity

2020
2021
2022
(expressed in millions of U.S. dollars)

17 $
—
(1)
16 $

1 $
—
1 $

— $
—
— $

19 $
—
(2)
17 $

3 $
(2)
1 $

1 $
(1)
— $

— $

400 $

110 $

18
1
—
19

3
—
3

1
—
1

—

400

110

(422) $

(422)

(1) $
—
(1) $

922 $
(4)
(162)
10

766 $

(1) $
—
(1) $

1,836 $
(3)
(937)
26

922 $

(16) $

81 $

—

2
(2)
—

(27)
(557)
(584)
(575) $

5,312 $
(945)
75
(36)
—

—

—
4,406 $

—
2
2

73
(100)
(27)
(16) $

4,809 $

553
(15)
(36)
1

—

—
5,312 $

230 $

14 $

—
(55)
(70)

(9)

219
(1)
(1)

(1)

—
(1)
(1)

1,837
(1)
(26)
26
1,836

(1)

(1)
1
—

(1)
74
73
81

2,888
1,731
28
(36)
46

158

(6)
4,809

14
—
—
—

—

96 $
4,797 $

230 $
6,553 $

14
6,850

$
$

(1) Represents the impact of adopting ASU 2016-13 - Financial Instruments - Credit Losses.

See accompanying notes to the consolidated financial statements

Enstar Group Limited | 2022 Form 10-K

117

ENSTAR GROUP LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2022, 2021 and 2020

OPERATING ACTIVITIES:

Net (loss) earnings

Net earnings from discontinued operations, net of income taxes

Adjustments to reconcile net (loss) earnings to cash flows provided by operating activities:

Realized losses (gains) on sale of investments

Unrealized losses (gains) on investments

Depreciation and other amortization

Amortization of net deferred charge assets

Losses (earnings) from equity method investments

Sales and maturities of trading securities

Purchases of trading securities

Payments to cover securities sold short

Proceeds from securities sold short

Net payments for derivative contracts

Net gain on purchase and sales of subsidiaries

Other

Changes in:

Reinsurance balances recoverable on paid and unpaid losses

Funds held by reinsured companies

Losses and loss adjustment expenses

Defendant asbestos and environmental liabilities

Insurance and reinsurance balances payable

Other operating assets and liabilities

Net cash flows provided by operating activities

INVESTING ACTIVITIES:

Acquisition, net of cash acquired

Sales of subsidiaries, net of cash previously held

Sales and maturities of available-for-sale securities

Purchase of available-for-sale securities

Purchase of other investments

Proceeds from other investments

Other investing activities

Consolidation of the InRe Fund opening cash and restricted cash balances (Note 14)

Net cash flows used in investing activities

FINANCING ACTIVITIES:

Dividends on preferred shares

Dividends paid to noncontrolling interests

Repurchase of shares

Issuance of debt, net of issuance costs

Repayment of debt

Net cash flows (used in) provided by financing activities

DISCONTINUED OPERATIONS CASH FLOWS:

Net cash flows provided by operating activities

Net cash flows used in investing activities

Net cash flows from discontinued operations

Enstar Group Limited | 2022 Form 10-K

Table of Contents

2022

2021

2020

(expressed in millions of U.S.
dollars)

(945) $

553 $ 1,731

—

(16)

135

(19)

1,479

(178)

(1,623)

(93)

(239)

2,840

6,175

3,792

(1,849)

(3,064)

(2,139)

—

(1,156)

534

(94)

(73)

—

(3)

375

248

(1,241)

(1,491)

(192)

(151)

1,870

1,003

(31)

(154)

(417)

(68)

(300)

718

(141)

369

257

3,801

2,786

— $

(206) $

—

(214)

(14)

2,502

3,085

2,260

(2,295)

(5,233)

(4,181)

(1,552)

(910)

(975)

420

—

330

574

595

(20)

—

(919)

(2,573)

(2,335)

(36) $

(36)

(55)

(163)

494

(356)

(116)

—

(1)

(942)

816

(574)

(737)

—

(26)

859

(679)

118

108

(130)

(22)

118

EFFECT OF EXCHANGE RATE CHANGES ON FOREIGN CURRENCY CASH, CASH EQUIVALENTS AND
RESTRICTED CASH

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR

NET CHANGE IN CASH OF BUSINESSES HELD-FOR-SALE

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR

Supplemental Cash Flow Information:

Income taxes paid, net of refunds

Interest paid

Reconciliation to Consolidated Balance Sheets:

Cash and cash equivalents

Restricted cash and cash equivalents

Cash, cash equivalents and restricted cash

Non-cash investing activities:

Table of Contents

(762)

495

2,092

1,373

(6)

541

971

—

224

(139)

$ 1,330 $ 2,092 $ 1,373

3 $

10 $

86 $

64 $

822 $ 1,646 $

508

446

901

472

$ 1,330 $ 2,092 $ 1,373

Receipt of AFS debt securities as consideration in exchange for assumption of liabilities

508 $

— $

Removal of equity method investment relating to acquisition of a subsidiary

Receipt of other investments as consideration

Contributions to other investments (1)

Redemption of other investments (1)

Reduction in investment fees (1)

Purchase of equity method investment through acquisition of subsidiary

Non-cash financing activities (2):

Distributions to redeemable noncontrolling interests

Increase in noncontrolling interests due to the acquisition of a subsidiary

Third-party capital withdrawal from the InRe Fund through transfer of trading security

—

(412)

(481)

381

100

—

(202)

(219)

(61)

—

(235)

—

(1) The contributions to other investments was fully funded through the redemption of other investments and the reduction in investment fees.
(2) Our non-cash financing activities for the year ended December 31, 2021 included the issuance of 89,590 shares following the exercise of

175,901 warrants on a non-cash basis.

See accompanying notes to the consolidated financial statements

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Table of Contents

ENSTAR GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021 and 2020
1. BASIS OF PRESENTATION

Enstar Group Limited ("Enstar") is a leading global (re)insurance group that offers innovative capital release
solutions through its network of group companies in Bermuda, the United States, the United Kingdom, Continental
Europe and Australia. Our core focus is acquiring and managing (re)insurance companies and portfolios of
(re)insurance business in run-off.

Our voting ordinary shares are listed on the NASDAQ Global Select Market under the ticker symbol "ESGR". Unless
the context indicates otherwise, the terms "Enstar," "we," "us" or "our" mean Enstar Group Limited and its
consolidated subsidiaries and the term "Parent Company" means Enstar Group Limited and not any of its
consolidated subsidiaries.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States ("U.S. GAAP"). All intercompany accounts and transactions have been
eliminated. Certain comparative information has been reclassified to conform to the current presentation.

Enhanzed Re

Our majority owned subsidiary, Enhanzed Reinsurance Ltd. ("Enhanzed Re"), is included in the consolidated
financial statements reported on a one quarter lag. The effect on our consolidated financial condition and results of
operations of all material events occurring at Enhanzed Re through December 31, 2022 has been considered for
adjustment and/or disclosure.

In August 2022, Enhanzed Re entered into a Master Agreement with Cavello Bay Reinsurance Limited (“Cavello”), a
wholly-owned subsidiary of Enstar, and Allianz SE (“Allianz”). Pursuant to the Master Agreement, Enhanzed Re,
Cavello and Allianz agreed to a series of transactions29 that allowed us to unwind Enhanzed Re’s operations in an
orderly manner. The transactions included (i) commuting or novating all of the reinsurance contracts written by
Enhanzed Re, (ii) repaying the $70 million of subordinated notes issued by Enhanzed Re to an affiliate of Allianz,
and (iii) distributing Enhanzed Re’s excess capital to Cavello and Allianz in accordance with their respective equity
ownership. As of December 31, 2022, all of the transactions were complete, and the impact of transactions
completed in the fourth quarter 2022 will be reflected in our first quarter 2023 results, as a result of the one quarter
reporting lag.

Use of Estimates, Risks and Uncertainties

The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and
assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

The estimation of unpaid claim liabilities at any given point in time is subject to a high degree of uncertainty for a
number of reasons. A significant amount of time can lapse between the assumption of risk, the occurrence of a loss
event, the reporting of the event to an (re)insurance company and the ultimate payment of the claim on the loss
event. Certain estimates for unpaid claim liabilities involve considerable uncertainty due to significant coverage
litigation and it can be unclear whether past claim experience will be representative of future claim experience.

We are subject to economic factors such as interest rates, inflation, foreign exchange rates, adverse reserve
developments, regulation, tax policy changes, political risks and other market risks that can impact our strategy,
operations, and results.

29 Refer to Note 10, Note 17 and Note 26 for additional details regarding completed transactions.

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120

Item 8 | Notes to Consolidated Financial Statements | Note 2 - Significant Accounting Policies

Table of Contents

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Retroactive Reinsurance Contracts

Retroactive reinsurance contracts provide indemnification for losses and loss adjustment expenses ("LAE") with
respect to past loss events. We do not record any income or expense on recognition of the contracts assets and
liabilities. Any subsequent remeasurement of the value of liabilities is recorded to net incurred losses and LAE within
the consolidated statements of earnings.

(b) Deferred Charge Assets and Deferred Gain Liabilities

If, at the inception of a retroactive reinsurance contract, the estimated liabilities for losses and LAE exceed the
premiums received, a deferred charge asset (“DCA”) is recorded for this difference. In contrast, if the premiums
received are in excess of the estimated undiscounted ultimate losses payable, a deferred gain liability (“DGL”) is
recorded. In addition, for retrocessions of losses and LAE reserves that we have assumed through retroactive
reinsurance contracts where the retroceded liabilities exceed the retrocession premiums paid, we record a DGL.

The premium consideration that we charge the ceding companies under retroactive reinsurance contracts may be
lower than our estimate of losses and LAE liabilities as these liabilities may not be settled for many years. Our
contractual counterparties (cedants) settle the premium consideration upon inception of the contract and we invest
the premium received over an extended period of time, thereby generating investment income. As a result, we
expect to generate profits from these retroactive reinsurance contracts when taking into account the premium
received and expected investment income, less contractual obligations and expenses.

Effective December 31, 2022, we voluntarily changed our accounting policy for calculating the amortization of our
DCAs and DGLs. Previously, any change in ultimate losses on the contracts with a recognized DCA or DGL would
result in the recognition of an adjustment to the DCA or DGL, as if the adjusted reserves had existed upon inception
of the contract. We will no longer adjust the DCAs or DGLs for these events.

We continue to amortize the originating DCA balances over the estimated claim payment period of the related
contracts with the amortization adjusted at each reporting period to reflect new estimates of the pattern and timing
of remaining loss and LAE payments. Previously, the amortization of our DCAs and DGLs was included in net
incurred losses and LAE. We now present the amortization of our DCAs and DGLs as a separate line item in our
consolidated statements of earnings.

Refer to Note 9 for additional information.

When liabilities for losses and LAE are extinguished through commutations and policy buybacks, they are removed
from our estimates for the remaining loss and LAE payments, and this will generally result in an acceleration of the
amortization of the DCAs.

DCAs are assessed at each reporting period for impairment and if the asset is determined to be impaired, then it is
written down in the period in which the determination is made with that write down reflected in earnings as a
component of net incurred losses and LAE.

For each reinsurance contact where a DCA has been recorded we assess for impairment at each reporting period
by determining the rate of return that we are required to earn on the invested assets to ensure that all cashflows
arising from the assumed liabilities are met in full over the projected remaining payout period. This required rate of
return is compared against the modeled rate of return, the weighted average portfolio yield and the actual
annualized rate of return in order to identify indicators that would lead us to record an impairment of the DCA.

Premiums written

Premiums written related to prospective risk policies are earned on a pro-rata basis over the period of the related
coverage. Reinsurance premiums on prospective risks are recorded at the inception of the policy, are based upon
contractual terms and, for certain business, are estimated based on underlying contracts or from information
provided by insureds and/or brokers.

Changes in reinsurance premium estimates for prospective risks are recorded as premiums written in the period in
which they are determined.

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Item 8 | Notes to Consolidated Financial Statements | Note 2 - Significant Accounting Policies

Certain contracts are retrospectively rated and provide for a final adjustment to the premium based on the final
settlement of all losses. Premiums on such contracts are adjusted based upon contractual terms, and management
judgment is involved with respect to the estimate of the amount of losses that we expect to incur. These
adjustments to the premium are recognized at the time loss thresholds specified in the contract are exceeded and
are earned over the coverage period, or are earned immediately if the period of risk coverage has passed.

Unearned Premium Reserves and Premiums Receivable

Unearned premium reserves, included within other liabilities on the consolidated balance sheets, represent the
unexpired portion of policy premiums. For retrospectively rated contracts as well as those contracts whose written
premium amounts are recorded based on premium estimates at inception, changes to accrued premiums arising
from changes to these estimates are reflected as changes in premium balances receivable where appropriate.

Premiums receivable are reported net of an allowance for expected credit losses as appropriate. The allowance is
based upon our ongoing review of amounts outstanding, historical loss data, including delinquencies and write-offs,
current and forecasted economic conditions and other relevant factors. The credit risk on our premiums receivable
balances is substantially reduced where we have the ability to cancel the underlying policy if the policyholder does
not pay the related premium.

(d) Acquisition Costs

Acquisition costs, consisting principally of incremental costs including, commissions and brokerage expenses and
certain premium taxes and fees incurred at the time a contract or policy is issued and which are directly related to
the successful efforts of acquiring new insurance contracts or renewing existing insurance contracts, are deferred
and amortized over the period in which the related premiums are earned.

Deferred acquisition costs (“DAC”), recorded within other assets on the consolidated balance sheets, are limited to
their estimated realizable value by line of business based on the related unearned premiums, anticipated claims and
claim expenses and anticipated investment income.

A premium deficiency occurs if the sum of anticipated losses and LAE exceed unearned premiums, DAC and
anticipated investment income. A premium deficiency is initially recognized by charging any DAC to expense to the
extent required in order to eliminate the deficiency. If the premium deficiency exceeds the DAC, then a liability is
accrued for the excess deficiency.

(e) Losses and LAE

The liability for losses and LAE includes reserves for unpaid reported losses and losses incurred but not reported
("IBNR").

We establish reserves for unpaid reported losses and LAE based on reports from brokers, ceding companies and
insureds and these represent the estimated ultimate cost of events or conditions that have been reported to or
specifically identified by us.

The reserves for IBNR losses are established by us based on actuarially determined estimates of ultimate losses
and LAE. Inherent in the estimate of ultimate losses and LAE are expected trends in claim severity and frequency,
historical loss experience, industry statistics and other factors which may vary significantly as claims are settled.

These estimates are reviewed regularly and are subject to the impact of future changes in the factors noted above
as well as economic conditions including the impact of inflation, legal and judicial developments, and medical cost
trends.

Any subsequent remeasurement of our reserves will be recorded in earnings in the period in which they become
known and reflected as part of the net increase or reduction in the estimates of ultimate losses included within net
incurred losses and LAE in the consolidated statements of earnings.

Prior period development ("PPD") arises from changes to loss estimates recognized in the current calendar year
that relate to loss reserves established in previous calendar years.

Our estimates, at inception and on an ongoing basis, do not include an estimate for potential future commutations
and policy buybacks. Commutations and policy buybacks are often unique and circumstance-based, and each
commutation or policy buyback is separately negotiated. Therefore, the successful execution of one commutation or

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Item 8 | Notes to Consolidated Financial Statements | Note 2 - Significant Accounting Policies

policy buyback does not necessarily impact the likelihood of other commutations or policy buybacks occurring in the
future.

Commutations and policy buybacks provide an opportunity for us to exit exposures to certain policies and insureds
generally at a discount to our estimate of the ultimate liability and provide us with the ability to eliminate exposure to
further losses which can be beneficial to us as they legally extinguish liabilities in full, reducing the potential for
future adverse loss development and future claims handling costs.

Commutations of acquired companies’ exposures have the effect of accelerating the payout of claims compared to
the probability-weighted ranges of actuarially projected cash flows that we applied when estimating the fair values of
assets and liabilities at the time of acquisition.

Commutations are only executed directly with (re)insureds and any changes in ultimate losses are recognized upon
the execution of a commutation or policy buyback with the (re)insured.

Any material acceleration of payout together with the impact of any material loss reserve savings in any period will
also accelerate the amortization of any associated fair value adjustments in that period.

Our (re)insurance subsidiaries also establish provisions for unallocated loss adjustment expenses ("ULAE") for LAE
relating to run-off costs for the estimated duration of the run-off, such as internal claim management or associated
operational support costs, which are included in the liability for losses and LAE. These provisions are assessed at
each reporting date, and provisions relating to future periods are adjusted to reflect any changes in estimates of the
periodic run-off costs or the duration of the run-off, including the impact of any acceleration of the run-off period that
may be caused by commutations. Provisions relating to the current period together with any adjustment to future
run-off provisions are included in net incurred losses and LAE in the consolidated statements of earnings.

Fair Value Option

We have elected to apply the fair value option for certain reinsurance contracts including, loss portfolio transfers
("LPTs") and reinsurance to close ("RITC") transactions. This is an irrevocable election that applies to all balances
under the reinsurance contract, including reinsurance balances recoverable on paid and unpaid losses and the
liability for losses and LAE.

We use an internal model to calculate the fair value of the liability for losses and LAE and the reinsurance balances
recoverable on paid and unpaid losses. The nominal amounts related to reinsurance balances recoverable on paid
and unpaid losses and the liability for losses and LAE are inputs in our internal model. These liabilities are included
in losses and LAE, at fair value on the consolidated balance sheets, and the changes in the liability are included in
net incurred losses and LAE on the consolidated statements of earnings.

(f) Future Policyholder Benefits

Our life reinsurance contracts include traditional single payment premium immediate annuities, life contingent
deferred annuities, and whole life reversion annuity policies all possessing significant mortality risk in the form of
longevity risk.

Future policyholder benefit provisions are established based on the present value of anticipated future cash flows,
which includes judgments over estimates of mortality rates, investment yields, policy expenses, and other
assumptions by reference to cedants' historical data, regional mortality tables, industry standards, and other
available information sources as may be reasonably available. These estimates include provisions for adverse
deviation.

These assumptions are locked in at contract inception or assumption and are only unlocked and modified if it is
deemed that the provision for future policyholder benefits are insufficient. The actual versus anticipated experience
of the assumptions are reviewed periodically. The effects of changes in assumptions are recorded to the
consolidated statements of earnings as adjustments in the period in which the assumptions are unlocked and
changes are made.

The consideration received for life reinsurance contracts is calculated as the fair value of the assets received net of
commissions, brokerage, or fronting fees.

(g) Defendant Asbestos and Environmental Liabilities

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Defendant asbestos and environmental liabilities ("defendant A&E liabilities") on our consolidated balance sheets
include amounts for indemnity and defense costs for pending and future asbestos-related claims, determined using
standard actuarial techniques for asbestos-related exposures.

Defendant A&E liabilities also include amounts for environmental liabilities, associated with the acquired companies'
properties, relating to estimated clean-up costs associated with the acquired companies' former operations based
on engineering reports.

Changes to our estimate of these liabilities are recorded to other income (expense) within the consolidated
statements of earnings in the period that our estimate is adjusted.

(h) Reinsurance Balances Recoverable on Paid and Unpaid Losses

Amounts recoverable from reinsurers are estimated in a manner consistent with the underlying liability for losses
and LAE. We report our reinsurance balances recoverable on paid and unpaid losses net of an allowance for
estimated uncollectible amounts.

Our allowance for estimated uncollectible reinsurance is derived based on various data sources, multiple key inputs
and forecast scenarios. These include the duration of the collection period, credit quality, changes in reinsurer credit
standing, default rates specific to the individual reinsurer, the geographical location of the reinsurer, contractual
disputes with reinsurers over individual contentious claims, contract language or coverage issues, industry analyst
reports and consensus economic forecasts.

To determine the allowance for estimated uncollectible reinsurance, we use the probability of default ("PD") and loss
given default ("LGD") methodology whereby each reinsurer is allocated an appropriate PD percentage based on the
expected payout duration by portfolio. This PD percentage is then multiplied by an appropriate LGD percentage to
arrive at an overall credit allowance percentage which is then applied to the reinsurance balance recoverable for
each reinsurer, net of any specific bad debt provisions, collateral or other contract related offsets, to arrive at the
overall allowance for estimated uncollectible reinsurance by reinsurer.

Amounts deemed to be uncollectible, including amounts due from known insolvent reinsurers, are written off against
the allowance.

Changes in the allowance, as well as any subsequent collections of amounts previously written off, are reported as
part of the net incurred losses and LAE in our consolidated statements of earnings.

On an ongoing basis, we also evaluate and monitor the credit risk of our reinsurers, including those under voluntary
schemes of arrangement, to minimize our exposure to significant losses from potential insolvencies.

(i) Insurance Balances Recoverable

Amounts billed to and due from insurers providing coverage for our defendant A&E liabilities are calculated in
accordance with the terms of the individual insurance contracts.

On an ongoing basis, we evaluate and monitor the credit risk related to our insurers and an allowance for estimated
uncollectible insurance balances recoverable on our defendant A&E liabilities ("allowance for estimated uncollectible
insurance") is established for amounts considered potentially uncollectible. To determine the allowance for
estimated uncollectible insurance, we use the inputs and methodologies as described in (h) Reinsurance Balances
Recoverable on Paid and Unpaid Losses above.

Amounts deemed to be uncollectible, including amounts due from known insolvent insurers, are written off against
the allowance.

Changes in the allowance, as well as any subsequent collections of amounts previously written off, are reported as
part of other income (expense) in our consolidated statements of earnings.

(j) Investments, Cash and Cash Equivalents

Cash and cash equivalents

Cash equivalents includes money market funds, fixed interest deposits and all highly liquid debt instruments
purchased with an original maturity of three months or less.

Short-term investments and fixed maturity investments

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Short-term investments comprise investments with a maturity greater than three months up to one year from the
date of purchase. Fixed maturities comprise investments with a maturity of greater than one year from the date of
purchase.

Short-term and fixed maturity investments classified as trading are carried at fair value, with realized and unrealized
gains and losses included in net earnings and reported as net unrealized gains and losses.

Short-term and fixed maturity investments classified as available-for-sale ("AFS") are carried at fair value, with
unrealized gains and losses excluded from net earnings and reported as a separate component of accumulated
other comprehensive income (loss) ("AOCI"). Realized gains and losses on sales of investments classified as AFS
are recognized in the consolidated statements of earnings.

The costs of short-term and fixed maturity investments are adjusted for amortization of premiums and accretion of
discounts, recognized using the effective yield method and included in net investment income. For mortgage-
backed and asset-backed investments, and any other holdings for which there is a prepayment risk, prepayment
assumptions are evaluated and reviewed on a regular basis.

Investment purchases and sales are recorded on a trade-date basis. Realized gains and losses on the sale of
investments are based upon specific identification of the cost of investments.

Allowance for Credit Losses

Each reporting period we identify any credit losses on our investment portfolios not measured at fair value through
net earnings. Credit losses on our fixed income securities, AFS are recognized through an allowance account which
is deducted from the amortized cost basis of the security, with the net carrying value of the security presented on
the consolidated balance sheet at the amount expected to be collected.

To calculate the amount of the credit loss, we compare the present value of the expected future cash flows with the
amortized cost basis of the fixed income securities, AFS, with the amount of the credit loss recognized being limited
to the excess of the amortized cost basis over the fair value of the fixed income securities, AFS, effectively creating
a “fair value floor”.

For our fixed income securities, AFS that we do not intend to sell or for which it is more likely than not that we will
not be required to sell before an anticipated recovery in value, we separate the credit loss component of any
unrealized losses from the amount related to all other factors and record the credit loss component in net realized
gains (losses) in our consolidated statements of earnings. The unrealized losses related to non-credit factors is
recorded in other comprehensive income. The allowance for credit losses account is adjusted for any additional
credit losses, write-offs and subsequent recoveries and is reflected in our consolidated statements of earnings.

For our fixed income securities, AFS where we record a credit loss, a determination is made as to the cause of the
credit loss and whether we expect a recovery in the fair value of the security. For our fixed income securities, AFS
where we expect a recovery in fair value, the constant effective yield method is utilized, and the investment is
amortized to par.

For our fixed income securities, AFS that we intend to sell or for which it is more likely than not that we will be
required to sell before an anticipated recovery in fair value, the full amount of the unrealized loss is included in net
realized gains (losses). The new cost basis of the investment is the previous amortized cost basis less the credit
loss recognized in net realized gains (losses). The new cost basis is not adjusted for any subsequent recoveries in
fair value.

Our allowance for credit losses is derived based on various data sources, multiple key inputs and forecast
scenarios. These include default rates specific to the individual security, vintage of the security, geography of the
issuer of the security, industry analyst reports, credit ratings and consensus economic forecasts.

To determine the credit losses on our fixed income securities, AFS, we use the PD and LGD methodology through a
third-party proprietary tool which calculates the expected credit losses based on a discounted cash flow method.
The tool uses effective interest rates to discount the expected cash flows associated with each AFS security to
determine its fair value, which is then compared with its amortized cost basis to derive the credit loss on the
security.

The methodology and inputs used to determine the credit loss by security type are as follows:

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•

Corporate and government securities: Expected cashflows are derived that are specific to each security. The
PD is based on a quantitative model that converts agency ratings to term structures that vary by country,
industry and the state of the credit cycle. This is used along with macroeconomic forecasts to produce scenario
conditioned PDs. The LGD is based on default studies provided by a third party which we use along with
macroeconomic forecasts to produce scenario conditioned LGDs.

• Municipal securities: Expected cash flows are derived that are specific to each security. The PD model
produces scenario conditioned PD output over the lifetime of the municipal security. These PDs are based on
key macroeconomic and instrument specific risk factors. The LGD is derived based on a model which uses
assumptions specific to the municipal securities.

For corporate, government and municipal securities, we use an explicit reversion and a three year forecast
period, which we consider to be a reasonable duration during which an economic forecast could continue to be
reliable.

•

Asset-backed, commercial and residential mortgaged-backed securities: Expected cash flows are derived
that are specific to each security. The PD and LGD for each security is based on a quantitative model that
generates scenario conditioned PD and LGD term structures based on the underlying collateral type, waterfall
and other trustee information. This model also considers prepayments. For these security types, there is no
explicit reversion and the forecasts are deemed reasonable and supportable over the life of the portfolio.

We report the investment income accrued on our fixed income securities, AFS within other assets and therefore
separately from the underlying fixed income securities, AFS. Due to the short-term period during which accrued
investment income remains unpaid, which is typically six months or less since the coupon on our debt securities is
paid semi-annually or more frequently, we elected not to establish an allowance for credit losses on our accrued
investment income balances. Accrued investment income is written off through net realized gains (losses) at the
time the issuer of the debt security defaults or is expected to default on payments.

Uncollectible fixed income securities are written off when we determine that no additional payments of principal or
interest will be received.

Equity Securities

We hold investments in publicly traded equities, exchange-traded funds and privately held equities. Unless we have
elected the measurement alternative, our equity investments are carried at fair value with realized and unrealized
gains and losses included in net earnings and recorded as net realized and unrealized gains and losses,
respectively.

We may elect to measure a privately held equity without a readily determinable fair value that does not qualify for
the practical expedient to estimate fair value at its cost less impairment, if any.

Other investments, at fair value

Other investments include investments in limited partnerships and limited liability companies (collectively "private
equity funds") and hedge funds, fixed income funds, equity funds, private credit funds, real estate funds,
collateralized loan obligation ("CLO") equities and CLO equity funds that carry their investments at fair value and
CLO equities.

We have elected the fair value option for certain of our other investments that would otherwise be accounted for as
an equity method investment. The primary reason for electing the fair value option is because we believe this
measurement basis is consistent with the applicable accounting guidance used by the investment funds
themselves.

Our other investments are stated at fair value, which ordinarily will be the most recently reported net asset value
("NAV") as advised by the fund manager or administrator. The NAV is based on the fund manager's or
administrator's valuation of the underlying holdings in accordance with the fund's governing documents. Many of our
fund investments publish NAVs on a daily basis and provide daily liquidity while others report on a monthly or
quarterly basis. Unrealized gains and losses on other investments are included in net earnings and reported as net
unrealized gains and losses.

Equity method investments

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Investments that we do not consolidate but in which we have significant influence over the operating and financial
policies of the investee are classified as equity method investments and are accounted for using the equity method
of accounting unless we have elected the fair value option.

In applying the equity method of accounting, investments are initially recorded at cost and are subsequently
adjusted based on the Company's proportionate share of net income or loss of the investee, net of any distributions
received from the investee.

We typically record our proportionate share of an investee's net income or loss on a quarter lag in line with the
timing of when they report their financial information to us. Any adjustments made to the carrying value of our equity
method investees are based on the most recently available financial information from the investees.

Changes in the carrying value of such investments are recorded in our consolidated statements of earnings as
earnings (losses) from equity method investments. Any decline in the value of our equity method investments
considered by management to be other-than-temporary is reflected in our consolidated statements of earnings in
the period in which it is determined.

(k) Variable interest entities

We have investments in certain limited partnership funds which are deemed to be variable interest entities (“VIEs”)
and which are included in other investments at the reported NAV.

Determining whether to consolidate a VIE may require judgment in assessing (i) whether an entity is a VIE, and (ii) if
we are the entity’s primary beneficiary and thus required to consolidate the entity. To determine if we are the primary
beneficiary of a VIE, we evaluate whether we have (i) the power to direct the activities that most significantly impact
the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits of the VIE
that could potentially be significant to the VIE.

Our evaluation includes identification of the activities that most significantly impact the VIE’s economic performance
and an assessment of our ability to direct those activities based on governance provisions, contractual
arrangements to provide or receive certain services, funding commitments and other applicable agreements and
circumstances. Our assessment of whether we are the primary beneficiary of our VIEs requires significant
assumptions and judgment.

(l) Funds Held

Under funds held arrangements, the reinsured company has retained funds that would otherwise have been
remitted to us. The funds balance is credited with investment income and losses paid are deducted.

Funds held are shown under two categories on the consolidated balance sheets, funds held where we receive the
underlying portfolio economics are shown as "Funds held - directly managed", and funds held where we receive a
fixed crediting rate or other contractually agreed return are shown as "Funds held by reinsured companies". Where
we receive a contractually agreed return, we evaluate whether we are required to recognize an embedded
derivative.

Funds held by reinsured companies are carried at cost and any embedded derivative is carried at fair value.

Funds held - directly managed, are carried at fair value because it represents the aggregate of funds held at cost
and the value of an embedded derivative. The embedded derivative relates to our contractual right to receive the
return on the underlying investment portfolio and the performance risk of the individual assets supporting the
reinsurance contract.

We include the estimated fair value of these embedded derivatives in the consolidated balance sheets with the host
contract in order to reflect the expected settlement of these features with the host contract.

The investment returns on both categories of funds held are recognized in net investment income and net realized
and unrealized gains (losses), respectively. The change in the fair value of the embedded derivative is included in
net unrealized gains (losses).

(m) Foreign Exchange

Our reporting currency is the U.S. dollar. Assets and liabilities of certain of our subsidiaries and equity method
investees whose functional currency is not the U.S. dollar are translated at period end exchange rates. Revenues

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and expenses of such foreign entities are translated at average exchange rates during the year. The effect of the
currency translation adjustments for these foreign entities is included in AOCI.

Other foreign currency assets and liabilities that are considered monetary items are translated at exchange rates in
effect at the balance sheet date. Foreign currency revenues and expenses are translated either at transaction date
exchange rates or using an appropriately weighted average exchange rate for the reporting period. These exchange
gains and losses are recognized in net foreign exchange gains (losses) in our consolidated statements of earnings.

(n) Share-based Compensation

We use three types of share-based compensation arrangements: (i) restricted shares, restricted share units
(“RSUs”) and performance share units ("PSUs"), (ii) joint share ownership program ("JSOP"), and (iii) shares issued
under our employee share purchase plans. Our share-based compensation awards qualify for equity classification.
We issue new shares once the awards have vested.

For equity-classified awards, the fair value of the compensation cost is measured at the grant date and is expensed
over the service period of the award within general and administrative expenses in the consolidated statements of
earnings. Expenses for the PSU awards are adjusted for changes in the performance multiplier on the award. We
recognize forfeitures as they occur.

(o) Derivative Instruments

We use derivative instruments in our risk management strategies and investment operations. Derivatives, with the
exception of embedded derivatives, are recorded on a trade-date basis and carried at fair value within other assets
or other liabilities in the consolidated balance sheets.

Embedded derivatives are generally presented with the host contract in the consolidated balance sheets. The
corresponding host contract is accounted for according to the accounting guidance applicable for that instrument.
Our convertible bond portfolio, recorded within fixed maturity securities, trading and AFS on the consolidated
balance sheets, and certain of our funds held arrangements (as described above) contain embedded derivatives.

Changes in the fair value as well as realized gains or losses on derivative instruments are recognized in net
earnings if they are not designated as qualifying hedging instruments or if the criteria for establishing a perfectly
effective designated hedging relationship for our net investment hedges has not been met. However, if a designated
net investment hedge is deemed to be perfectly effective, then we recognize the changes in the fair value of the
underlying hedging instrument in AOCI until the application of hedge accounting is discontinued. Any cumulative
gains or losses arising on designated net investment hedges are deferred in AOCI until the cumulative translation
adjustment from the underlying hedged net investment is recognized in net earnings due to a disposal,
deconsolidation or substantial liquidation.

(p) Income Taxes

Certain of our subsidiaries and branches operate in jurisdictions where they are subject to taxation. Current and
deferred tax expense or benefit is allocated to net earnings (loss), or, in certain cases, to discontinued operations or
other comprehensive income (loss). Current tax is recognized and measured using enacted tax laws and rates
applicable in the relevant jurisdiction in the period in which the income tax is accrued or realized. Deferred taxes are
provided for temporary differences between the carrying amount of assets and liabilities used in the financial
statements and the tax basis used in the various jurisdictional tax returns. When our assessment indicates that all or
some portion of deferred tax assets will not be realized, a valuation allowance is recorded against the deferred tax
assets to reduce the assets to an amount more likely than not to be realized.

We recognize the benefit relating to tax positions only where the position is more likely than not to be sustained
assuming examination by tax authorities. A recognized tax benefit is measured as the largest amount that is greater
than 50 percent likely of being realized upon settlement. A liability or other adjustment is recognized for any tax
benefit (along with any interest and penalty, if applicable) claimed in a tax return in excess of the amount allowed to
be recognized in the financial statements under U.S. GAAP. Any changes in amounts recognized are recorded in
the period in which they are determined in our consolidated statements of earnings.

(q) Earnings Per Share

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Basic earnings per share is based on the weighted average number of ordinary shares outstanding and excludes
potentially dilutive securities such as restricted shares, restricted share units, warrants, options and convertible
securities.

Diluted earnings per share is based on the weighted average number of ordinary and ordinary share equivalents
outstanding calculated using the treasury stock method for all potentially dilutive securities. When the effect of
dilutive securities would be anti-dilutive, these securities are excluded from the calculation of diluted earnings per
share.

(r) Acquisitions and Goodwill

We record business acquisition assets and liabilities at their estimated fair value. The fair values of each of the
acquired (re)insurance assets and liabilities are derived from probability-weighted ranges of the associated
projected cash flows, based on actuarially prepared information and our run-off strategy.

Our run-off strategy is expected to be different from the seller's, who generally do not specialize in running off
(re)insurance liabilities.

The key assumptions used by us in the valuation of acquired companies are (i) the projected payout, timing and
amount of claims liabilities; (ii) the related projected timing and amount of reinsurance collections; (iii) an
appropriate discount rate, which is applied to determine the present value of the future cash flows; (iv) the estimated
unallocated LAE to be incurred over the life of the run-off; (v) the impact of any accelerated run-off strategy; and
(vi) an appropriate risk margin.

The difference between the nominal carrying values of the acquired reinsurance liabilities and assets as of the
acquisition date and their fair value is recorded as a fair value adjustment ("FVA") on the consolidated balance
sheet. The FVA is amortized over the estimated payout period of the acquired outstanding losses and LAE and
reinsurance balances recoverable. We carry unamortized FVA balances on the following consolidated balance sheet
captions: losses and loss adjustment expenses, defendant asbestos and environmental liabilities and reinsurance
balances recoverable on paid and unpaid losses.

To the extent the actual payout experience after the acquisition is materially faster or slower than anticipated at the
time of the acquisition as a result of, (i) our active claims management strategies, which include commutations and
policy buybacks, (ii) an adjustment to the estimated ultimate loss reserves, (iii) changes in bad debt provisions, or
(iv) changes in estimates of future run-off costs following accelerated payouts, then the amortization of the FVA is
adjusted to reflect such changes.

The difference between the fair value of net assets acquired and the purchase price is recorded as goodwill and
included as an asset on the consolidated balance sheet or as a gain from bargain purchase in the consolidated
statements of earnings. Goodwill is established initially upon acquisition and assessed at least annually for
impairment. If the goodwill asset is determined to be impaired it is written down in the period in which the
determination is made.

(s) Redeemable Noncontrolling Interests

We have contracted with certain parties holding noncontrolling interests in certain of our subsidiaries. These
contracts provide certain redemption rights to the holders, which may be settled in our own shares or cash or a
combination of cash and shares, at our option.

Redeemable noncontrolling interests with redemption features that are not solely within our control are classified
within temporary equity in the consolidated balance sheets and carried at their redemption value, which is fair value.
Any change in the fair value is recognized through retained earnings as if the balance sheet date was also the
redemption date.

(t) Held-for-sale Business and Discontinued Operations

We report a business as held-for-sale when certain criteria are met, which include (i) management has either
approved the sale or is in the process of obtaining approval to sell the business and is committed to a formal plan to
sell the business, (ii) the business is available for immediate sale in its present condition, (iii) the business is being
actively marketed for sale at a price that is reasonable in relation to its current fair value, and (iv) the sale is
anticipated to occur within the next 12 months, among other specified criteria.

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A business classified as held-for-sale is recorded at the lower of its carrying amount or estimated fair value less
costs to sell. If the carrying amount of the business exceeds its estimated fair value, a loss is recognized. Assets
and liabilities related to the business classified as held-for-sale are separately reported in our consolidated balance
sheets beginning in the period in which the business is classified as held-for-sale.

Disposals that represent strategic shifts that have or will have a major effect on our operations and financial results
are reported as discontinued operations which requires the restatement of the comparatives reflected on our
consolidated financial statements. In addition, transactions with discontinued operations are not eliminated on
consolidation and any transactions that were previously eliminated on consolidation but which will continue with the
discontinued operations are restated for all periods presented and reflected within continuing operations in our
consolidated financial statements.

New Accounting Standards Adopted in 2022

ASU 2021-04 - Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity -
Classified Written Call Options

In May 2021, the FASB issued ASU 2021-04 which requires issuers to account for modifications or exchanges of
freestanding equity-classified written call options that remain equity classified after the modification or exchange
based on the economic substance of the modification or exchange. Under the ASU, an issuer considers the facts
and circumstances of a modification or exchange and accounts for the resulting change in fair value of the written
call option based on whether the transaction was done to issue equity, to issue or modify debt, or for other reasons.
The guidance clarifies that to the extent applicable, issuers should first reference other GAAP to account for the
effect of a modification. If other GAAP is not applicable, the guidance clarifies whether to account for the
modification or exchange as either (i) an adjustment to equity, or (ii) an expense.

The adoption of ASU 2021-04 did not have an impact on our consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

ASU 2018-12 - Targeted Improvement to the Accounting for Long-Duration Contracts

In August 2018, the FASB issued ASU 2018-12 and subsequently issued ASUs 2019-09 and 2020-11 serving to
defer the effective date of implementation. These updates:

•

Require at least annual review of assumptions used to determine the provision for future policyholder benefits
with the recognition of any resulting re-measurement gains or losses, excluding those related to discount rate
changes, in the consolidated statement of earnings;

Use upper-medium grade fixed-income instrument discount rates to discount future cash flows with the impact
of these changes recognized in other comprehensive income; and

Introduce new disclosure requirements around the provisions for future policyholder benefits, policyholder
account balances, market risk benefits, separate account liabilities, and DAC, which includes information about
significant inputs, judgments, assumptions and methods used in measurement.

These amendments are effective for interim and annual reporting periods beginning after December 15, 2022. Early
adoption is permitted and certain provisions of the update are required to be adopted on a fully retrospective basis,
while others may be adopted on a modified retrospective basis.

We will adopt ASU 2018-12 effective January 1, 2023 using the modified retrospective transition approach, with a
transition date of September 1, 2021. This is the date that we acquired Enhanzed Re through a step acquisition and
consolidated Enhanzed Re’s existing assets and liabilities, including all of our future policyholder benefit contracts.
We do not anticipate that the adoption of this standard will have a material impact on our shareholders’ equity as of
the transition date.

We have estimated the impact of remeasuring the discount rate assumptions applied to our future policyholder
benefits using an upper-medium grade fixed-income instrument yield for each reporting period from transition to
December 31, 2022. We anticipate that the adoption of ASU 2018-12 as of January 1, 2023 will result in an increase
to AOCI of between $340 million and $380 million. The impact of remeasuring our future policyholder benefits from
September 1, 2021 to December 31, 2022 is primarily driven by a change in the discount rate assumption, which

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reflected increases in interest rates during 2022. This impact to AOCI will be reclassified to earnings upon the
novation of the Enhanzed Re life business that will be included in the first quarter 2023 financial statements.

Adopting ASU 2018-12 will also require us to expand our future policyholder benefit disclosures.

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3. SEGMENT INFORMATION

Our segment structure aligns with how our chief operating decision maker ("CODM"), our Chief Executive Officer,
views our business, assesses performance and allocates resources to our business components. Our business is
organized into four reportable segments:

•

Run-off: consists of our acquired property and casualty and other (re)insurance business, including our
defendant asbestos and environmental (“A&E”) businesses and StarStone International (from January 1, 2021)
following our decision to place it into an orderly run-off.

Our primary objective of the Run-off segment is to recognize favorable prior period development in our net
incurred losses and LAE (run-off liability earnings or “RLE”) over time by settling claims in a timely, cost efficient
manner using our claims management expertise, including settling claims for lower than outstanding ultimate
loss estimates and implementation of reinsurance and commutation strategies.

The Run-off segment results comprises net premiums earned, other income, net incurred losses and LAE,
acquisition costs and general and administrative expenses.

•

Assumed Life: The Assumed Life segment includes Enhanzed Re’s life and property aggregate excess of loss
(catastrophe) business.

In 2021, we ceased accepting any new catastrophe reinsurance business and, in 2022, we completed a series
of commutation and novation agreements which ceased any continuing reinsurance obligations for this
segment. Given our rationalization of the Enhanzed Re reinsurance business30, we have renamed the segment
from Enhanzed Re to Assumed Life in 2022. We may leverage this segment for any future potential assumed
life business transactions if and when they occur. Our primary objective of the Assumed Life segment is to
reinsure products that focus on longevity and investment risks.

The Assumed Life segment results comprises net premiums earned, net incurred losses and LAE, policyholder
benefit expenses, acquisition costs and general and administrative expenses.

•

Investments: consists of our investment activities and the performance of our investment portfolio, excluding
those investable assets attributable to our Legacy Underwriting segment.

Our primary objective of the Investments segment is to obtain the highest possible risk and capital adjusted
returns while maintaining prudent diversification of assets and operating within the constraints of a global
regulated (re)insurance company. We additionally consider the liquidity requirements and duration of our claims,
policyholder benefits and contract liabilities.

The Investments segment results comprises net investment income, net realized gains (losses), net unrealized
gains (losses), general and administrative expenses and earnings from equity method investments.

•

Legacy Underwriting: consists of businesses that we have either, in the case of Atrium, exited via the sale of
the majority of our interest in or, in the case of StarStone International (included in the Legacy Underwriting
Segment through December 31, 2020), placed into run-off.

Prior to January 1, 2021, this segment comprised SGL No. 1 Limited (“SGL No. 1”)'s 25% net share of Atrium's
Syndicate 609 business at Lloyd's and StarStone International. From January 1, 2021, this segment comprises
SGL No.1's 25% gross share of the 2020 and prior underwriting years of Atrium's Syndicate 609 at Lloyd's,
offset by the contractual transfer of the results of that business to the Atrium entities that were divested in an
exchange transaction (the “Exchange Transaction”)31. There is no net retention for Enstar on Atrium's 2020 and
prior underwriting years.

The Legacy Underwriting segment results comprises net premiums earned, net investment income, net realized
gains (losses), net unrealized gains (losses), other income (expense), net incurred losses and LAE, acquisition
costs and general and administrative expenses.

Management measures segment performance based on segment income (loss). Segment income (loss) is derived
by including certain items from total income and net earnings (loss) attributable to Enstar ordinary shareholders, as

Refer to Note 1 for additional details.

30
31 Refer to Note 5 for a discussion of the Exchange Transaction.

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Item 8 | Notes to Consolidated Financial Statements | Note 3 - Segment Information

defined above. Income and expense items that are not directly attributable to our reportable segments are included
within our corporate and other activities, which do not qualify as an operating segment. These include,

a. holding company income and expenses,

the amortization of net DCAs on retroactive reinsurance contracts,

the amortization of fair value adjustments associated with the acquisition of companies,

d. changes in the discount rate and risk margin components of the fair value of assets and liabilities related to our

assumed retroactive reinsurance contracts for which we have elected the fair value option,

e. corporate expenses not allocated to our reportable segments,

debt servicing costs,

g. net foreign exchange gains (losses),

h. gains (losses) arising on the purchases and sales of subsidiaries (if any),

income tax benefit (expense),

net earnings (losses) from discontinued operations, net of income tax (if any),

k. net (earnings) loss attributable to noncontrolling interest, and

preferred share dividends.

Items b, c and d above form part of corporate and other activities as the CODM evaluates the performance of the
Run-off and Legacy Underwriting segments without consideration of these amounts.

Expenses that are directly attributable to our four reportable segments are disclosed under those segments while
non-direct expenses, as well as costs related to shared services that are not directly attributable to our reportable
segments, are allocated to our reportable segments as well as to our corporate and other activities, on the basis of
the actual or proportion of benefit derived from the services provided.

Our assets are reviewed on a consolidated basis by management for decision making purposes since they support
business operations across all of our four reportable segments as well as our corporate and other activities. We do
not allocate assets to our reportable segments with the exception of reinsurance balances recoverable on paid and
unpaid losses and goodwill that are directly attributable to our reportable segments.

Enstar Group Limited | 2022 Form 10-K

133

Item 8 | Notes to Consolidated Financial Statements | Note 3 - Segment Information

The following tables set forth select consolidated statement of earnings results by segment for the years ended
December 31, 2022, 2021, and 2020:

Table of Contents

Income

Run-off

Assumed Life

Investments

Legacy Underwriting

Subtotal

Corporate and other

Total income

(Losses) earnings from equity method investments

Investments

Segment net (loss) earnings

Run-off

Assumed Life

Investments

Legacy Underwriting

Total segment net (loss) earnings

Corporate and other:

Other income (expense) (1)
Net gain on purchase and sale of subsidiaries
Net incurred losses and LAE (2)
Policyholder benefit expenses

Amortization of net deferred charge assets

General and administrative expenses

Interest expense

Net foreign exchange gains (losses)

Income tax benefit (expense)

Net earnings from discontinued operations, net of income tax
Net loss (earnings) attributable to noncontrolling interest

Dividends on preferred shares

Total - Corporate and other
Net (loss) earnings attributable to Enstar Ordinary
Shareholders

2022

2021

2020

(in millions of U.S. dollars)

62 $

(1,159)

(1,070)

255 $

429

732

(1,058) $

789 $

191

—

1,898

587

2,676

(16)

2,660

(74) $

93 $

239

339 $

(1,270)

—

(891)

—

218

—

(80)

(142)

(89)

—
75

(36)

(15)

217 $

485

—

708

(16)

(1)

(55)

(131)

(69)

(27)

—
(15)

(36)

(206)

143

—

2,102

(93)

2,152

(19)

(147)

—

(39)

(136)

(59)

(16)

(24)

16
28

(36)

(429)

(906) $

502 $

1,723

(1) Other income (expense) for corporate and other activities includes the amortization of fair value adjustments associated with the acquisition of

DCo, LLC (“Dco”) and Morse TEC LLC (“Morse TEC”).

(2) Net incurred losses and LAE for corporate and other activities includes the fair value adjustments associated with the acquisition of companies
and the changes in the discount rate and risk margin components of the fair value of assets and liabilities related to our assumed retroactive
reinsurance contracts for which we have elected the fair value option.

Enstar Group Limited | 2022 Form 10-K

134

Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 3 - Segment Information

Gross Premiums Written by Geographical Area

The following table summarizes our gross premiums written by geographical region, which is based upon the
location of the subsidiaries underwriting the policies, respectively, for the years ended December 31, 2022, 2021
and 2020.

Run-off

Assumed Life

Legacy Underwriting

Total

(In millions of U.S. dollars, except percentages)

2022

United States
United Kingdom(1)
Europe

Asia

Rest of World

Total

(7)

—

60.0 % $

(140.0) %

20.0 %

160.0 %

— %

100.0 % $

—

— % $

— %

100.0 %

— %

100.0 % $

—

100.0 % $

— %

0.0 %

100.0 % $

(7)

—

44.0 %

(28.0) %

52.0 %

32.0 %

— %

100.0 %

(1) Gross premiums written were negative for Run-off segment business located in the U.K., primarily as a result of an agreement made

between one of our subsidiaries and a cedant to return premiums written.

Run-off

Assumed Life

Legacy Underwriting

Total

(In millions of U.S. dollars, except percentages)

2021

27.5 % $

29.4 %

17.6 %

11.8 %

13.7 %

—

— % $

— %

100.0 %

— %

100.0 % $

48.1 % $

7.7 %

9.6 %

3.8 %

30.8 %

36.9 %

17.9 %

16.0 %

7.5 %

21.7 %

100.0 % $

106

100.0 %

2020

United States

United Kingdom
Europe

Asia

Rest of World

Total

United States

United Kingdom

Europe

Asia

Rest of World

Total

Run-off

Legacy Underwriting

Total

(In millions of U.S. dollars, except percentages)

—

(1)

100.0 % $

— %

20.0 %

— %

(20.0) %

100.0 % $

178

119

100

547

32.5 % $

21.8 %

15.0 %

12.4 %

18.3 %

183

119

33.2 %

21.6 %

15.0 %

12.3 %

17.9 %

100.0 % $

552

100.0 %

Enstar Group Limited | 2022 Form 10-K

135

Item 8 | Notes to Consolidated Financial Statements | Note 4 - Business Acquisitions

Table of Contents

4. BUSINESS ACQUISITIONS

Enhanzed Re

On September 1, 2021, we completed the purchase of the entire 27.7% equity interest in Enhanzed Re held by an
affiliate of Hillhouse Group for cash consideration of $217 million and assumed the Hillhouse Group's affiliate's
remaining outstanding capital commitment to Enhanzed Re of $40 million (the "Step Acquisition").

Following the completion of the Step Acquisition, our equity interest in Enhanzed Re increased from 47.4% to
75.1%. Effective September 1, 2021, we consolidated Enhanzed Re (previously accounted for as an equity method
investment) and eliminated any intercompany transactions and balances between us and Enhanzed Re.

On December 28, 2022, Enhanzed Re acquired Allianz SE’s ("Allianz")32 remaining 24.9% interest for $174 million,
the impact of which will be reflected in our first quarter 2023 results as a result of reporting the results of Enhanzed
Re on a one quarter lag.

The following table represents the fair value of net assets acquired, inclusive of the net effect of settlement of pre-
existing relationships, as of September 1, 2021:

Fair Value of Net
Assets Acquired,
Before Settlement of
Pre-existing
Relationships

Net Effect of
Settlement of
Pre-existing
Relationships

Net Effect of
Step
Acquisition

(in millions of U.S. dollars)

ASSETS

Fixed maturities, trading, at fair value

49 $

Funds held - directly managed

Equities, at fair value

Other investments, at fair value

Total investments

Cash and cash equivalents

Funds held by reinsured companies

Other assets

TOTAL ASSETS

LIABILITIES

Losses and LAE

Future policyholder benefits

Debt obligations

Insurance and reinsurance balances payable

Other liabilities

TOTAL LIABILITIES

NET ASSETS ACQUIRED AT FAIR VALUE

Less:

Cash consideration paid to Hillhouse Group affiliate

Fair value of previously held equity method investment

Fair value of noncontrolling interest

Adjustment for the fair value of pre-existing relationships

Total purchase price

Bargain purchase gain

32 Refer to Note 26 for further information.

3,727 $

(304) $

3,423

2,576

855

3,494

214

1,113 $

1,539

102

2,846

881 $

— $

(304)

—

(304)

—

2,272

855

3,190

214

(271) $

—

(6)

(7)

(284)

(20) $

842

1,539

2,562

861

217

418

219

(20)

834

136

Enstar Group Limited | 2022 Form 10-K

Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 4 - Business Acquisitions

During the third quarter of 2021, we recognized a total gain on the Step Acquisition of $47 million, which was
recorded in net gain on purchase and sales of subsidiaries in our consolidated statements of earnings, and
consisted of a bargain purchase gain, a gain on remeasurement of our previously held equity investment to fair
value and a gain on settlement of pre-existing relationships.

We recognized a bargain purchase gain of $27 million for the year ended December 31, 2021 as the fair value of
the interest in the net assets acquired exceeded the total purchase price. The bargain purchase gain was
attributable to the negotiation process with Hillhouse Group and the resulting cash consideration paid was based on
90% of Enhanzed Re's total shareholders' equity as of June 30, 2021 which was less than the fair value of the net
assets acquired.

In accordance with the acquisition method of accounting, we remeasured our previously held equity method
investment in Enhanzed Re to fair value. The fair value of the previously held equity method investment and
noncontrolling interest was calculated as the fair value of Enhanzed Re's total net assets multiplied by the
respective ownership percentages. These fair value measurements are based on significant inputs not observable
in the market and thus represent Level 3 measurements. We also considered guideline market transactions, and the
implied multiple from those transactions corroborated the results of the fair value estimate.

At the time of the transaction, we held contractual pre-existing relationships with Enhanzed Re, consisting of quota
share reinsurance contracts and an agreement to act as the insurance manager for Enhanzed Re. The pre-existing
relationships were deemed to be effectively settled at fair value on the acquisition date.

We record Enhanzed Re's results on a one quarter lag. The table below summarizes the results of Enhanzed Re's
operations, which are included in our consolidated statement of earnings from September 1, 2021, the date of
acquisition, to December 31, 2021:

Total income

Net loss

Net loss attributable to Enstar ordinary shareholders

(1) Excludes earnings from our previously held equity method investment in Enhanzed Re33.

Supplemental Pro Forma Financial Information (Unaudited)

September 1 to December
31, 2021 (1)
(in millions of U.S. dollars)

(17)

(19)

(15)

The following selected unaudited pro forma financial information is a summary of our combined results with
Enhanzed Re, giving effect to the Step Acquisition as if it had occurred on January 1, 2020. The unaudited pro
forma financial information presented below is for informational purposes only and is not necessarily indicative of
the results that would have been achieved if the Step Acquisition had taken place on January 1, 2020, nor is it
indicative of future results.

Total income

Net earnings

Net earnings attributable to Enstar

Net earnings attributable to Enstar ordinary shareholders

2021

2020

(in millions of U.S. dollars)

1,071 $

494

445

409

3,070

1,942

1,892

1,856

The unaudited pro forma financial information is presented on a fully consolidated basis. Aside from a pro forma
adjustment made to recognize the gain on the Step Acquisition as of January 1, 2020, there were no further non-
recurring pro forma adjustments recorded.

33 Refer to Note 23 for further information.

Enstar Group Limited | 2022 Form 10-K

137

Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 5 - Divestitures, Held-for-Sale Businesses and Discontinued Operations

5. DIVESTITURES, HELD-FOR-SALE BUSINESSES AND DISCONTINUED OPERATIONS

The following table provides a summary of the net gain on sales of subsidiaries which was recorded in net gain on
purchase and sales of subsidiaries included in our consolidated statements of earnings for the years ended
December 31, 2021 and 2020:

Atrium

SUL

Other

Net gain on sales of subsidiaries

Atrium Exchange Transaction

2021

2020

(in millions of U.S. dollars)

(8) $

26 $

—

In 2020 and 2021 we executed a series of transactions to exit our direct investment in active underwriting
businesses. We completed these transaction with our co-investors and connected parties, Trident V, L.P., Trident V
Parallel Fund, L.P. and Trident V Professionals Fund, L.P. (collectively, the "Trident V Funds"), managed by
StonePoint Capital LLC (“Stone Point”) and Dowling Capital Partners I, L.P. and Capital City Partners LLC
(collectively, the "Dowling Funds").

In November 2020, we sold our majority interest in StarStone U.S. to Core Specialty, a newly formed entity.

In January 2021, we acquired the Trident V Fund’s interest in Core Specialty in exchange for a portion of our
indirect interest in Northshore (the holding company of Atrium and Arden), and subsequently deconsolidated
Northshore. As of December 31, 2022, we hold a 13.8% interest in Northshore and a 19.9% interest in Core
Specialty.

Through our wholly owned subsidiary, SGL No. 1, a Lloyd’s corporate member, we provided 25% of the underwriting
capacity on the 2017 to 2020 underwriting years of Atrium's Syndicate 609 at Lloyd’s. In conjunction with the
completion of the Exchange Transaction, SGL No.1 ceased its provision of underwriting capacity on Syndicate 609
for future underwriting years.

SGL No.1 was obligated to support underwriting capacity on Syndicate 609 through the provision of Funds at
Lloyd’s (“FAL”), and settled its share of the 2020 and prior underwriting years for the economic benefit of Atrium via
reinsurance agreements with Arden and a Syndicate 609 Capacity Lease Agreement with Atrium 5 Limited, a UK
domiciled subsidiary of Atrium through December 31, 2022.

As a result of these contractual arrangements, the net loss reserve liabilities, cash, investments and other assets
that support those liabilities, will be settled by: i) the distribution of SGL No.1’s share of the Syndicate 609 result; ii)
the settlement of the net payable or receivable position on the reinsurance agreement with Arden; and iii) the
required settlement, if any, of the Syndicate 609 Capacity Lease Agreement payable, which will occur in 2023.

Balances due from (due to) under these contractual arrangements as of December 31, 2022 and 2021 were as
follows:

Distribution of SGL No.1 share of Syndicate 609 results

Due to Arden under reinsurance agreement

Due to Atrium 5 Limited under Capacity Lease Agreement

Net balances with Northshore Group

2022

2021

(in millions of U.S. dollars)

21 $

(10)

(11)

— $

(22)

(12)

—

As of December 31, 2022, we carried gross loss reserves of $173 million (2021: $215 million), reinsurance
recoverables of $35 million (2021: $62 million) and net assets required to support the net insurance liabilities of
$138 million (2021: $152 million).

Enstar Group Limited | 2022 Form 10-K

138

Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 5 - Divestitures, Held-for-Sale Businesses and Discontinued Operations

For the years ended December 31, 2022 and 2021, there was no retention by Enstar of the net results of Atrium's
2020 and prior underwriting years as the business was contractually transferred to the Atrium entities that were
divested in the Exchange Transaction.

Recapitalization of StarStone U.S. and Discontinued Operations

On November 30, 2020, we completed the sale and recapitalization of StarStone U.S. through the sale of StarStone
U.S. to Core Specialty. We received consideration of $282 million in the form of common shares of Core Specialty
and cash.

The StarStone U.S. business qualified as a discontinued operation. The following table summarizes the
components of net earnings (loss) from discontinued operations, net of income taxes, related to StarStone U.S., on
the consolidated statements of earnings for the year ended December 31, 2020:

2020

(in millions of U.S.
dollars)

INCOME

Net premiums earned

Net investment income

Net realized gains

Net unrealized gains

EXPENSES

Net incurred losses and LAE

Acquisition costs

General and administrative expenses

Interest expense

LOSS BEFORE INCOME TAXES

Income tax benefit

NET EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES, BEFORE GAIN
ON SALE

DISPOSAL

Consideration received

Less: Carrying value of subsidiary

Add: Net realized gains on AFS securities and cumulative currency translation adjustments previously
recognized in AOCI

Gain on sale of subsidiary

NET EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES

Net (earnings) from discontinued operations attributable to noncontrolling interest

NET EARNINGS FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO ENSTAR ORDINARY
SHAREHOLDERS

Continuing Involvement

291

310

192

312

(2)

—

282

(278)

(9)

Following the completion of the sale of StarStone U.S. to Core Specialty on November 30, 2020, our continuing
involvement with StarStone U.S comprised of the following transactions:

LPT and ADC reinsurance agreement

In connection with the sale of StarStone U.S. to Core Specialty, one of our insurance subsidiaries entered into an
LPT and ADC reinsurance agreement with StarStone U.S. pursuant to which we reinsured all of the net loss
reserves of StarStone U.S. in respect of premium earned prior to October 31, 2020.

Enstar Group Limited | 2022 Form 10-K

139

Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 5 - Divestitures, Held-for-Sale Businesses and Discontinued Operations

Our subsidiary's obligations to StarStone U.S. under the LPT and ADC reinsurance agreement are guaranteed by
the Parent Company. The LPT and ADC reinsurance agreement between our subsidiary and StarStone U.S. will
continue in force until such time as our liability with respect to the assumed total net loss reserves terminates.

Concurrent with the closing of the LPT and ADC reinsurance agreement, one of our wholly-owned subsidiaries
entered into an Administrative Services Agreement ("ASA") with StarStone U.S., through which it was appointed as
an independent contractor to provide certain administrative services covering the business we assumed from
StarStone U.S. through the LPT and ADC reinsurance agreement. This ASA became effective on November 30,
2020 and will continue in force (subject to certain limited exceptions) until such time as the LPT and ADC
reinsurance agreement terminates.

In addition, concurrent with the sale of StarStone U.S. to Core Specialty, one of our wholly-owned subsidiaries
entered into a Transition Services Agreement ("TSA") with Core Specialty to provide certain transitional services
relating to the StarStone U.S. businesses. The TSA was terminated in November 2022.

Reinsurance transactions previously eliminated on consolidation

The table below presents a summary of the total income and expenses which have been recognized within our
continuing operations relating to transactions, primarily reinsurances, between StarStone U.S. and us:

Total income (1)
Total expenses (1)
Net (loss) earnings

2022

2021

2020

(in millions of U.S. dollars)

— $

(18) $

(1) $

(21) $

(16)

(1) For the year ended December 31, 2021, negative total income was driven by a premium adjustment. For the year ended December 31, 2020,
negative total expenses were driven by favorable loss development on the losses and LAE reserves ceded by StarStone U.S. to our
subsidiaries.
Cash flows

The cash (outflows) inflows between our subsidiaries and StarStone U.S. for the years ended December 31, 2022,
2021 and 2020 were $(129) million, $(102) million and $99 million, respectively.

Equity method investment

Our investment in the common shares of Core Specialty, which is included in equity method investments on our
consolidated balance sheets, was $211 million as of December 31, 2022 (2021: $225 million).

During the year ended December 31, 2022, our proportionate share of loss on our investment in Core Specialty was
$14 million (2021: $6 million), which is included within earnings from equity method investments in our consolidated
statement of earnings and is recorded on a quarter lag.

Run-off of StarStone International (non-U.S.)

In June 2020, we placed StarStone International into an orderly run-off (the "StarStone International Run-Off"). The
results of StarStone International are included within continuing operations.

In March 2021, we sold StarStone Underwriting Limited ("SUL"), a Lloyd's managing agency, together with the right
to operate Lloyd's Syndicate 1301 for the 2021 and future years of account, to Inigo Limited ("Inigo"), in exchange
for shares in Inigo and cash. We recognized a gain on the sale of $23 million. In addition, we committed to invest up
to $27 million in Inigo.

As of December 31, 2022, our investment in Inigo, which is accounted for as a privately held equity investment and
carried at fair value, was $40 million (2021: $43 million), and we have funded $22 million of our capital commitment,
with $5 million yet to be called by Inigo.

Enstar Group Limited | 2022 Form 10-K

140

Item 8 | Notes to Consolidated Financial Statements | Note 6 - Investments

Table of Contents

6. INVESTMENTS

We hold:

trading portfolios of short-term and fixed maturity investments and equities, carried at fair value;

i.
ii. AFS portfolios of short-term and fixed maturity investments, carried at fair value;
iii. other investments carried at fair value;
iv. equity method investments; and
v.

funds held - directly managed, carried at fair value.

Short-term and Fixed Maturity Investments

Asset Types

The fair values of the underlying asset categories comprising our short-term and fixed maturity investments
classified as trading and AFS and the fixed maturity investments included within our funds held - directly managed
balance were as follows as of December 31, 2022 and 2021:

Short-term
investments,
trading

Short-term
investments,
AFS

Fixed
maturities,
trading

Fixed
maturities,
AFS

Fixed maturities,
funds held - directly
managed

Total

(in millions of U.S. dollars)

2022

U.S. government and agency

14 $

10 $

64 $

300

128 $

U.K. government

Other government

Corporate (1)

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

Structured products

Total fixed maturity and short-term
investments

—

188

131

1,594

2,988

191

155

—

362

628

682

—

143

679

113

203

586

516

462

5,286

211

552

1,022

914

586

14 $

38 $

2,370 $

5,223

1,986 $

9,631

(1) Includes convertible bonds of $233 million, which includes embedded derivatives of $34 million.

Short-term
investments,
trading

Short-term
investments,
AFS

Fixed
maturities,
trading

Fixed
maturities,
AFS

Fixed maturities,
funds held - directly
managed

Total

(in millions of U.S. dollars)

2021

U.S. government and agency

3 $

25 $

102 $

434 $

183 $

U.K. government

Other government

Corporate (1)

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

Structured products

—

285

128

2,660

3,350

104

250

197

—

128

391

562

649

—

247

796

115

262

1,033

747

663

6,814

286

610

1,074

944

1,033

Total fixed maturity and short-term
investments

6 $

34 $

3,756 $

5,652 $

2,806 $

12,254

(1) Includes convertible bonds of $223 million, which includes embedded derivatives of $43 million.

Enstar Group Limited | 2022 Form 10-K

141

Item 8 | Notes to Consolidated Financial Statements | Note 6 - Investments

Table of Contents

Included within residential and commercial mortgage-backed securities as of December 31, 2022 were securities
issued by U.S. governmental agencies with a fair value of $429 million (as of December 31, 2021: $460 million).

The fair value of fixed maturities, trading and fixed maturities, AFS, which have been non-income producing for the
twelve months preceding December 31, 2022 was $8 million and $25 million, respectively.

Contractual Maturities

The contractual maturities of our short-term and fixed maturity investments, classified as trading and AFS, and the
fixed maturity investments included within our funds held - directly managed balance are shown below. Actual
maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations
with or without call or prepayment penalties.

As of December 31, 2022

One year or less

More than one year through five years

More than five years through ten years

More than ten years

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

Amortized
Cost

Fair Value

% of Total Fair
Value

(in millions of U.S. dollars)

343 $

3,103

2,351

2,981

613

1,115

952

11,458 $

334

2,826

1,952

2,031

552

1,022

914

9,631

3.5 %

29.3 %

20.3 %

21.1 %

5.7 %

10.6 %

9.5 %

100.0 %

Unrealized Gains and Losses on AFS Short-Term and Fixed Maturity Investments

The amortized cost, unrealized gains and losses, allowance for credit losses and fair values of our short-term and
fixed maturity investments classified as AFS as of December 31, 2022 and 2021 were as follows:

As of December 31, 2022

Amortized
Cost

Gross
Unrealized
Gains

Non-Credit
Related
Losses

Allowance for
Credit Losses

Fair Value

Gross Unrealized Losses

(in millions of U.S. dollars)

U.S. government and agency

338 $

— $

U.K. government

Other government

Corporate

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

146

3,466

120

407

689

706

—

(28) $

(2)

(15)

(428)

(22)

(45)

(63)

(25)

— $

—

(1)

(32)

—

310

131

3,013

362

628

682

5,908 $

14 $

(628) $

(33) $

5,261

Enstar Group Limited | 2022 Form 10-K

142

Item 8 | Notes to Consolidated Financial Statements | Note 6 - Investments

Table of Contents

As of December 31, 2021

Amortized
Cost

Gross
Unrealized
Gains

Non-Credit
Related
Losses

Allowance for
Credit Losses

Fair Value

Gross Unrealized Losses

(in millions of U.S. dollars)

U.S. government and agency

463 $

1 $

U.K. government

Other government

Corporate

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

127

3,384

129

394

566

650

—

(5) $

—

(1)

(45)

(2)

(4)

(7)

(1)

— $

—

459

128

(10)

3,358

—

128

391

562

650

5,723 $

38 $

(65) $

(10) $

5,686

Gross Unrealized Losses on AFS Short-term and Fixed Maturity Investments

The following table summarizes our short-term and fixed maturity investments classified as AFS that were in a gross
unrealized loss position, for which an allowance for credit losses has not been recorded, as of December 31, 2022
and 2021:

As of December 31, 2022

12 Months or Greater

Less Than 12 Months

Total

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

(in millions of U.S. dollars)

U.S. government and agency

188 $

(19) $

112 $

U.K. government

Other government

Corporate

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

Total short-term and fixed maturity
investments

—

(4)

(9) $

(2)

(11)

300 $

114

1,261

(246)

1,542

(182)

2,803

185

277

186

(14)

(35)

(43)

(10)

154

275

357

(8)

(10)

(20)

(15)

339

552

543

(28)

(2)

(15)

(428)

(22)

(45)

(63)

(25)

2,181 $

(371) $

2,571 $

(257) $

4,752 $

(628)

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Item 8 | Notes to Consolidated Financial Statements | Note 6 - Investments

Table of Contents

As of December 31, 2021

12 Months or Greater

Less Than 12 Months

Total

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

(in millions of U.S. dollars)

U.S. government and agency

22 $

(1) $

373 $

(4) $

395 $

U.K. government

Other government

Corporate

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

Total short-term and fixed maturity
investments

—

(1)

—

1,545

315

419

516

—

(1)

(19)

(2)

(4)

(6)

(1)

1,556

321

440

516

(5)

—

(1)

(19)

(2)

(4)

(7)

(1)

60 $

(2) $

3,296 $

(37) $

3,356 $

(39)

As of December 31, 2022 and 2021, the number of securities classified as AFS in an unrealized loss position for
which an allowance for credit loss is not recorded was 2,935 and 2,930, respectively. Of these securities, the
number of securities that had been in an unrealized loss position for twelve months or longer was 1,155 and 93,
respectively.

The contractual terms of a majority of these investments do not permit the issuers to settle the securities at a price
less than the amortized cost basis of the security. While interest rates have increased and credit spreads have
widened, and in certain cases credit ratings were downgraded, we currently do not expect the issuers of these fixed
income securities to settle them at a price less than their amortized cost basis and therefore it is expected that we
will recover the entire amortized cost basis of each security. Furthermore, we do not intend to sell the securities that
are currently in an unrealized loss position, and it is also not more likely than not that we will be required to sell the
securities before the recovery of their amortized cost bases.

Allowance for Credit Losses on AFS Fixed Maturity Investments

The following table provides a reconciliation of the beginning and ending allowance for credit losses on our AFS
debt securities:

December 31, 2022

December 31, 2021

Other
government

Corporate

Total

Corporate

Total

(in millions of U.S. dollars)

Allowance for credit losses, beginning of year

— $

(10) $

— $

Allowances for credit losses on securities for which credit
losses were not previously recorded

Reductions for securities sold during the year

(Increase) decrease to the allowance for credit losses on
securities that had an allowance recorded in the previous
period

Allowance for credit losses, end of year

—

(1)

(1) $

(31)

(16)

—

(32) $

(33) $

(10) $

—

(16)

—

(10)

During the years ended December 31, 2022 and 2021, we did not have any write-offs charged against the
allowance for credit losses or any recoveries of amounts previously written-off.

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Item 8 | Notes to Consolidated Financial Statements | Note 6 - Investments

Table of Contents

Equity Investments

The following table summarizes our equity investments as of December 31, 2022 and 2021:

Publicly traded equity investments in common and preferred stocks
Exchange-traded funds
Privately held equity investments in common and preferred stocks

2022

2021

(in millions of U.S. dollars)

385 $
507
358
1,250 $

281
1,342
372
1,995

Equity investments include publicly traded common and preferred stocks, exchange-traded funds and privately held
common and preferred stocks. Our publicly traded equity investments in common and preferred stocks
predominantly trade on major exchanges and are managed by our external advisors. Our investments in exchange-
traded funds also trade on major exchanges.

The following table summarizes our other investments carried at fair value as of December 31, 2022 and 2021:

Hedge funds
Fixed income funds
Private equity funds
Private credit funds
Equity funds
CLO equity funds
CLO equities
Real estate funds

2022
2021
(in millions of U.S. dollars)

549 $
547
1,282
362
3
203
148
202
3,296 $

291
573
752
275
5
207
161
69
2,333

The following is a description of the nature of each of these investment categories:

•

Hedge funds invest in fixed income, equity and other investments.

Fixed income funds comprise a number of positions in diversified fixed income funds that are managed by third-
party managers. Underlying investments vary from high-grade corporate bonds to non-investment grade senior
secured loans and bonds, in both liquid and illiquid markets. The liquid fixed income funds have regularly
published prices.

Private equity funds include primary, secondaries diversified by asset classes, regional vintage and sectors and
direct co-investment opportunities.

Private credit funds invest in direct senior or collateralized loans.

Equity funds invest primarily in public equities.

CLO equity funds invest primarily in the equity tranches of term-financed securitizations of diversified pools of
corporate bank loans.

34 Refer to Note 23 for further information on certain privately held equity investments.

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Item 8 | Notes to Consolidated Financial Statements | Note 6 - Investments

Table of Contents

•

CLO equities comprise investments in the equity tranches of term-financed securitizations of diversified pools of
corporate bank loans.

Real estate funds comprise of real estate funds that invest primarily in commercial real estate equity.

Other investments, including equities measured at fair value using NAV as a practical expedient

We use NAV as a practical expedient to fair value certain of our other investments, including equities. Due to a lag
in the valuations of certain funds reported by the managers, we may record changes in valuation with up to a three-
month lag35. We regularly review and discuss fund performance with the fund managers to corroborate the
reasonableness of the reported net asset values and to assess whether any events have occurred within the lag
period that would affect the valuation of the investments.

Certain of our other investments are subject to restrictions on redemptions and sales that are determined by the
governing documents, which limits our ability to liquidate those investments. These restrictions may include lock-
ups, redemption gates, restricted share classes or side pockets, restrictions on the frequency of redemption and
notice periods. A gate is the ability to deny or delay a redemption request, whereas a side-pocket is a designated
account for which the investor loses its redemption rights.

Certain of our other investments may not have any restrictions governing their sale, but there is no active market
and no guarantee that we will be able to execute a sale in a timely manner. In addition, even if these investments
are not eligible for redemption or sales are restricted, we may still receive income distributions from those other
investments.

The table below details the estimated period by which proceeds would be received if we had provided notice of our
intent to redeem or initiated a sales process as of December 31, 2022 for our investments measured at fair value
using NAV as a practical expedient:

Less than
1 Year

1-2 years

2-3 years

More than
3 years

Not
Eligible/
Restricted

Total

Redemption
Frequency

(in millions of U.S. dollars)

Equities

Privately held equity
investments

Other investments

— $

39 $

N/A

Hedge funds

549 $

— $

549

Fixed income funds

Private equity funds

Private credit funds

CLO equity funds

Real estate funds

395

—

174

—

457

1,225

362

202

1,282

362

203

202

1,118 $

85 $

— $

1,891 $

3,094

As of December 31, 2022, $60 million of our investments were subject to gates or side-pockets.

Monthly to Bi-
annually

Daily to
Quarterly

Quarterly for
unrestricted
amount

N/A

Quarterly to Bi-
annually

N/A

35 The valuation of our other investments is described in Note 13.

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Item 8 | Notes to Consolidated Financial Statements | Note 6 - Investments

Table of Contents

Equity Method Investments

The table below shows our equity method investments as of December 31, 2022 and 2021:

Citco (1)
Monument Re (2)
Core Specialty

Other

2022

2021

Ownership %

Carrying Value

Ownership %

Carrying Value

(in millions of U.S. dollars)

31.9 %

20.0 %

19.9 %

27.0 %

110

211

397

31.9 %

20.0 %

24.7 %

27.0%

194

225

493

(1) We own 31.9% of the common shares in HH CTCO Holdings Limited which in turn owns 15.4% of the convertible preferred shares, amounting

to a 6.2% interest in the total equity of Citco III Limited ("Citco").

(2) We own 20.0% of the common shares in Monument Re as well as different classes of preferred shares which have fixed dividend yields and

whose balances are included in the Investment amount (2022 losses include an other-than-temporary impairment charge).

Summarized Financial Information

The following is the aggregated summarized financial information of our equity method investees that meet the
significance disclosure requirement, including those for which the fair value option was elected and would otherwise
be accounted for as an equity method investment, and may be presented on a lag due to the availability of financial
information from the investee:

Balance Sheet

Total assets

Total liabilities

Operating Results(1)

Total income

Total expenses

Net (loss) income

2022

2021

(in millions of U.S. dollars)

51,278 $

39,496

45,741

33,858

2022

2021

2020

(in millions of U.S. dollars)

6,524 $

9,190 $

6,885

8,098

(361) $

1,092 $

6,093

5,234

859

(1) Refer to Note 14 for the summarized operating results of our equity method investment in the InRe Fund for the three months ended March 31,

2021 and the year ended December 31, 2020, prior to our consolidation of the InRe Fund on April 1, 2021

The following table presents the carrying value by ownership percentage of our equity method investees, including
those for which the fair value option was elected:

2022

2021

Equity Method
Investments

Fair Value Option

Equity Method
Investments

Fair Value Option

(in millions of U.S. dollars)

Ownership percentage

100%

20%-99%

3%-19%

Total

— $

186

211

— $

1,096

809

397 $

1,905 $

— $

493

—

493 $

Enstar Group Limited | 2022 Form 10-K

—

828

749

1,577

147

Item 8 | Notes to Consolidated Financial Statements | Note 6 - Investments

Table of Contents

Funds Held

Funds Held - Directly Managed

The following table summarizes the components of the funds held - directly managed as of December 31, 2022 and
2021:

Short-term and fixed maturity investments, trading
Cash and cash equivalents
Other assets

2022

2021

(in millions of U.S. dollars)

1,986 $
41
13
2,040 $

2,806
188
13
3,007

The following table summarizes the short-term and fixed maturity investment components of funds held - directly
managed as of December 31, 2022 and 2021:

Short-term and fixed maturity investments, at amortized cost

Net unrealized gains (losses):

Change in fair value - embedded derivative accounting
Change in fair value (1)

2022

2021

(in millions of U.S. dollars)

2,765 $

2,815

(572)

(207)

(23)

Short-term and fixed maturity investments within funds held - directly managed, at fair value

1,986 $

2,806

(1) Is clearly and closely related to the host contract.

Refer to the sections above for details of the short-term and fixed maturity investments within our funds held -
directly managed portfolios.

Funds Held by Reinsured Companies

As of December 31, 2022 and 2021, we had funds held by reinsured companies of $3.6 billion and $2.3 billion,
respectively. The increase from December 31, 2021 was primarily driven by the LPT transaction with Aspen.

Pursuant to the terms of the Aspen LPT transaction, in addition to earning a fixed crediting rate (“base crediting
rate”) on the funds withheld balance we received as premium consideration, as of October 1, 2022 and through
September 30, 2025 we will also receive a variable return based on the performance of Aspen’s investments
(together, the “full crediting rate”).

The nature of the arrangement results in an embedded derivative, which represents the fair value of the amount by
which all future interest payments on the funds withheld balance made at the full crediting rate are expected to
exceed all future interest payments made on the funds withheld balance at the base crediting rate. The fair value of
the embedded derivative as of December 31, 2022 was $44 million.

Fund held by reinsurance companies, at amortized cost

Initial recognition of embedded derivative

Net unrealized gains:

Change in fair value - embedded derivative

Funds held by reinsured companies, at fair value

2022

(in millions of U.S. dollars)

3,538

3,582

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Item 8 | Notes to Consolidated Financial Statements | Note 6 - Investments

Table of Contents

Net Investment Income

Major categories of net investment income for the years ended December 31, 2022, 2021 and 2020 are
summarized as follows:

Fixed maturity investments

Short-term investments and cash and cash equivalents

Funds held by reinsured companies

Funds held – directly managed

Investment income from fixed maturities and cash and cash
equivalents

Equity investments
Other investments(1)

Investment income from equities and other investments

Gross investment income

Investment expenses

Net investment income

2022

2021

2020

(in millions of U.S. dollars)

237 $

191 $

199

100

398

480

—

276

349

(25)

455 $

(37)

312 $

272

319

(16)

303

(1) Effective April 1, 2021, the InRe Fund was consolidated by us and subsequently liquidated by December 31, 2021. Refer to Note 14 for
additional information. Prior to April 1, 2021, all income or loss from the InRe Fund was determined by the change in net asset value (NAV) of
our holdings in the fund, which was included within net realized and unrealized gains (losses) from other investments.

Net Realized and Unrealized Gains (Losses)

Components of net realized and unrealized gains (losses) for the years ended December 31, 2022, 2021 and 2020
were as follows:

2022

2021
(in millions of U.S. dollars)

2020

Net realized gains on sale:

Gross realized gains on fixed maturity securities, AFS

Gross realized losses on fixed maturity securities, AFS

Increase in allowance for expected credit losses on fixed maturity
securities, AFS

Net (losses) gains recognized on equity securities sold during the period
Other investments (1)
Net realized investment gains on investment derivatives

6 $

(89)

(28)

(21)

—

(3)

Total net realized (losses) gains on sale

(135) $

Net unrealized (losses) gains:

Fixed maturity securities, trading

Fixed maturity securities in funds held - directly managed

Net unrealized (losses) gains recognized on equity securities still held at
the reporting date
Other investments (1)
Investment derivatives

(503)

(567)

(269)

(125)

(15)

Total net unrealized (losses) gains

(1,479) $

19 $

(13)

(10)

(132)

(61) $

(144)

(62)

146

259

(21)

178 $

(8)

—

228

(2)

1,336

1,623

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Item 8 | Notes to Consolidated Financial Statements | Note 6 - Investments

Table of Contents

The gross realized gains and losses on AFS investments included in the table above resulted from sales of $2.1
billion, $2.5 billion and $2.0 billion for the years ended December 31, 2022, 2021 and 2020, respectively.

Reconciliation to the Consolidated Statements of Comprehensive Income

The following table provides a reconciliation of the gross realized gains and losses and credit recoveries (losses) on
our AFS fixed maturity debt securities that arose during the years ended December 31, 2022, 2021 and 2020 within
our continuing and discontinued operations and the offsetting reclassification adjustments included within our
consolidated statements of comprehensive income:

Included within continuing operations:

Gross realized gains on fixed maturity securities, AFS

Gross realized losses on fixed maturity securities, AFS

Tax effect

Included within discontinued operations:

Gross realized gains on fixed maturity securities, AFS

Total reclassification adjustment for net realized gains (losses) included in net
earnings

Included within continuing operations:

Credit losses on fixed maturity securities, AFS

Included within discontinued operations:

Credit recoveries on fixed maturity securities, AFS

Total reclassification adjustment for change in allowance for credit losses
recognized in net earnings

Restricted Assets

2022

2021

2020

(in millions of U.S. dollars)

6 $

(89)

19 $

(13)

—

(81) $

6 $

(28) $

(10) $

— $

(28) $

(10) $

(8)

(1)

—

We utilize trust accounts to collateralize business with our (re)insurance counterparties. We are also required to
maintain investments and cash and cash equivalents on deposit with regulatory authorities and Lloyd's to support
our (re)insurance operations. The investments and cash and cash equivalents on deposit are available to settle
(re)insurance liabilities. Collateral generally takes the form of assets held in trust, letters of credit or funds held. The
assets used as collateral are primarily highly rated fixed maturity securities. The carrying value of our restricted
assets, including restricted cash of $508 million and $446 million, as of December 31, 2022 and 2021, respectively,
was as follows:

Collateral in trust for third party agreements

Assets on deposit with regulatory authorities

Collateral for secured letter of credit facilities
FAL (1)

2022

2021

(in millions of U.S. dollars)

5,343 $

6,100

159

365

196

431

5,949 $

6,821

(1) Our businesses included two Lloyd's syndicates as at December 31, 2022 and 2021. Lloyd's determines the required capital principally through
the annual business plan of each syndicate. This capital is referred to as FAL and will be drawn upon in the event that a syndicate has a loss
that cannot be funded from other sources. We also utilize unsecured letters of credit for FAL, as described in Note 17.

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 7 - Derivatives and Hedging Instruments

7. DERIVATIVES AND HEDGING INSTRUMENTS

We use derivative instruments in our risk management strategies and investment operations.

Foreign currency forward exchange rate contracts are used in qualifying hedging relationships to hedge the foreign
currency exchange rate risk associated with certain of our net investments in foreign operations.

We also utilize foreign currency forward contracts in non-qualifying hedging relationships as part of our overall
foreign currency risk management strategy or to obtain exposure to a particular financial market, as well as for yield
enhancement and collectively managing credit and duration risk.

From time to time we may also utilize credit default swaps to both hedge and replicate credit exposure and
government bond futures contracts for interest rate management.

The following table presents the gross notional amounts and estimated fair values of our derivatives recorded within
other assets and other liabilities on the consolidated balance sheets as of December 31, 2022 and 2021:

2022

Fair Value

2021

Fair Value

Gross Notional
Amount

Assets

Liabilities

Gross Notional
Amount

Assets

Liabilities

(in millions of U.S. dollars)

Derivatives designated as hedging
instruments

Foreign currency forward contracts

442 $

1 $

11 $

618 $

— $

Derivatives not designated as
hedging instruments

Foreign currency forward contracts

Others

Total

244

—

498

—

693 $

6 $

12 $

1,133 $

2 $

—

The following table presents the net gains and losses deferred in the cumulative translation adjustment account,
which is a component of AOCI in shareholders' equity, relating to our qualifying hedges and the net gains and losses
included in earnings relating to our non-qualifying hedges for the years ended December 31, 2022, 2021 and 2020:

2022

Amount of Gains (Losses)

2021
(in millions of U.S. dollars)

2020

Derivatives designated as hedging instruments

Foreign currency forward contracts

50 $

24 $

Derivatives not designated as hedging instruments

Foreign currency forward contracts

(10)

(4)

(30)

(2)

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Item 8 | Notes to Consolidated Financial Statements | Note 8 - Reinsurance Balances Recoverable on Paid and Unpaid Losses

8. REINSURANCE BALANCES RECOVERABLE ON PAID AND UNPAID LOSSES

The following tables provide the total reinsurance balances recoverable on paid and unpaid losses.

Table of Contents

Recoverable from reinsurers on unpaid:

Outstanding losses and IBNR

ULAE

Fair value adjustments - acquired companies

Fair value adjustments - fair value option

Total reinsurance reserves recoverable

Paid losses recoverable

Total

Reconciliation to Consolidated Balance Sheet:

Reinsurance balances recoverable on paid and unpaid losses

Reinsurance balances recoverable on paid and unpaid losses - fair value
option

Total

December 31, 2022

December 31, 2021

(in millions of U.S. dollars)

1,075 $

(6)

(79)

996

135

1,131 $

856 $

275

1,131 $

1,367

(8)

(34)

1,332

185

1,517

1,085

432

1,517

Certain of our subsidiaries and assumed portfolios, prior to acquisition, used retrocessional agreements to reduce
their exposure to the risk of (re)insurance assumed.

The fair value adjustments, determined on acquisition of (re)insurance subsidiaries, are based on the estimated
timing of loss and LAE recoveries and an assumed interest rate equivalent to a risk free rate for securities with
similar duration to the acquired reinsurance balances recoverable on paid and unpaid losses plus a spread for credit
risk, and are amortized over the estimated recovery period, as adjusted for accelerations in timing of payments as a
result of commutation settlements36.

As of December 31, 2022 and 2021, we had reinsurance balances recoverable on paid and unpaid losses of $1.1
billion and $1.5 billion, respectively. The decrease of $386 million was primarily due to cash collections, adverse
ceded development and foreign exchange movement.

Top Ten Reinsurers

Top 10 reinsurers

Other reinsurers > $1 million

Other reinsurers < $1 million

Total

December 31, 2022

Total

December 31, 2021

Total

(in millions of U.S. dollars)

792

319

70.0 % $

28.2 %

1.8 %

1,131

100.0 % $

1,002

491

1,517

66.1 %

32.4 %

1.5 %

100.0 %

The determination of the fair value adjustments on the retroactive reinsurance contracts for which we have elected the fair value option is
described in Note 13.

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 8 - Reinsurance Balances Recoverable on Paid and Unpaid Losses

Information regarding top ten reinsurers:

Number of top 10 reinsurers rated A- or better
Number of top 10 non-rated reinsurers (1)

Reinsurers rated A- or better in top 10
Non-rated reinsurers in top 10 (1)
Total top 10 reinsurance recoverables

Single reinsurers that represent 10% or more of total reinsurance
balance recoverables as of December 31, 2022 and 2021:

Lloyd's Syndicates (2)
Michigan Catastrophic Claims Association(3)

December 31, 2022 December 31, 2021

(in millions of U.S. dollars)

578 $

214

792 $

193 $

171 $

747

255

1,002

256

210

(1) The reinsurance balances recoverable from non-rated top 10 reinsurers was comprised of:
•

$171 million and $210 million as of December 31, 2022 and December 31, 2021 respectively, due from a U.S. state backed reinsurer that is
supported by assessments on active auto writers operating within the state;

•

$43 million and $45 million as of December 31, 2022 and December 31, 2021 due from a U.S. Workers' Compensation Reinsurance Pool
that is secured through an allocation to insurers actively writing workers' compensation in the covered state;

(2) Lloyd's Syndicates are rated A+ by Standard & Poor's and A by A.M. Best.
(3) U.S. state backed reinsurer that is supported by assessments on active auto writers operating within the state.

The table below provides a reconciliation of the beginning and ending allowance for estimated uncollectible
reinsurance balances for the years ended December 31, 2022 and 2021:

Allowance for estimated uncollectible reinsurance, beginning of year

136 $

Effect of exchange rate movement

Current period change in the allowance

Recoveries collected

(6)

—

Allowance for estimated uncollectible reinsurance, end of year

131 $

137

—

(2)

136

2022

2021

(in millions of U.S. dollars)

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 9 - Deferred Charge Assets and Deferred Gain Liabilities

9. DEFERRED CHARGE ASSETS AND DEFERRED GAIN LIABILITIES

Change in net DCA Amortization

Effective December 31, 2022, we voluntarily changed our accounting policy for calculating the amortization of our
DCAs. Previously, any change in ultimate losses on the contracts with a recognized DCA would result in the
recognition of an adjustment to the DCA, as if the adjusted reserves had existed upon inception of the contract. We
will no longer adjust the DCA for these events.

We continue to amortize the originating DCA balances over the estimated claim payment period of the related
contracts with the amortization adjusted at each reporting period to reflect new estimates of the pattern and timing
of remaining losses and LAE payments. Previously, the amortization of our DCAs and DGLs was included in net
incurred losses and LAE. We now present the amortization of our DCAs and DGLs as a separate line item in our
consolidated statements of earnings.

We will continue to assess the DCA for impairment and record any adjustments in the period evaluated.

We made the change in accounting policy because the primary basis for accepting premium consideration that is
lower than the estimate of losses and LAE liabilities assumed is due to the time value of money, inclusive of our
expectation of generating investment income, rather than expectations of changes in ultimate losses on the
contracts.

We believe that the change in policy improves the usefulness of our financial statements as the changes in
amortization of the DCA will no longer offset the loss developments, which allows the insurance loss developments
to be recognized consistently through our consolidated statement of earnings regardless of whether the contract
resulted in a DCA at inception.

We have retrospectively applied this change in accounting policy to all applicable prior period information presented
herein as required. As of January 1, 2020, the cumulative effect of this change resulted in a $158 million increase to
retained earnings, which is reflected as a cumulative change in accounting principle in the consolidated statements
of changes in shareholders’ equity.

The following tables provide a summary of the effect of the change in accounting policy on our 2022 and previously
reported consolidated financial statements:

Consolidated Balance Sheets

Deferred charge assets

Retained earnings

Deferred charge assets

Retained earnings

As of December 31, 2022

As Computed
Under Previous
Method

Effect of
Accounting
Change

As Reported
Under New
Method

(in millions of U.S. dollars)

268 $

4,016

390 $

390

658

4,406

As of December 31, 2021

As Previously
Reported

Adjustment

As Adjusted

(in millions of U.S. dollars)

371 $

5,085

227 $

227

598

5,312

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Item 8 | Notes to Consolidated Financial Statements | Note 9 - Deferred Charge Assets and Deferred Gain Liabilities

Consolidated Statements of Earnings

Table of Contents

Net incurred losses and LAE:

Prior Period

Total net incurred losses and loss adjustment expenses

Amortization of net deferred charge assets

Total expenses

NET LOSS FROM CONTINUING OPERATIONS

NET LOSS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS

Loss per ordinary share attributable to Enstar:

Basic

Diluted

Year Ended December 31, 2022

As Computed
Under Previous
Method

Effect of
Accounting
Change

As Reported
Under New
Method

(in millions of U.S. dollars, except per share data)

(513) $

(465)

—

(12)

(1,108)

(1,069) $

(243) $

(243)

(163)

163

163 $

(756)

(708)

(175)

(945)

(906)

(62.13) $

9.48 $

(62.13) $

9.48 $

(52.65)

Net incurred losses and LAE:

Prior period

Total net incurred losses and loss adjustment
expenses

Amortization of net deferred charge assets

Total expenses

NET EARNINGS FROM CONTINUING
OPERATIONS

NET EARNINGS ATTRIBUTABLE TO ENSTAR
ORDINARY SHAREHOLDERS

Earnings per ordinary share attributable to Enstar:

Basic:

Net earnings from continuing operations

Net earnings from discontinued operations

Net earnings per ordinary share

Diluted:

Net earnings from continuing operations

Net earnings from discontinued operations

Net earnings per ordinary share

Year Ended December 31, 2021

Year Ended December 31, 2020

As
previously
reported

Adjustment

As
adjusted

As
previously
reported

Adjustment

As
adjusted

(in millions of U.S. dollars, except per share data)

(283) $

(120) $

(403) $

11 $

(43) $

(32)

(111)

(120)

(231)

—

367

(65)

488

302

553

416

—

1,164

1,711

(43)

373

(4)

1,160

1,715

437 $

65 $

502 $

1,719 $

4 $

1,723

22.05 $

3.28 $

25.33 $

79.43 $

0.17 $

79.60

—

0.35

—

0.35

22.05 $

3.28 $

25.33 $

79.78 $

0.17 $

79.95

21.71 $

3.23 $

24.94 $

78.45 $

0.17 $

78.62

—

0.35

—

0.35

21.71 $

3.23 $

24.94 $

78.80 $

0.17 $

78.97

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Item 8 | Notes to Consolidated Financial Statements | Note 9 - Deferred Charge Assets and Deferred Gain Liabilities

Consolidated Statements of Comprehensive Income

NET LOSS

COMPREHENSIVE LOSS ATTRIBUTABLE TO ENSTAR

Year Ended December 31, 2022

As Computed
Under Previous
Method

Effect of
Accounting
Change

As Reported
Under New
Method

(in millions of U.S. dollars)

(1,108) $

163 $

(945)

(1,592) $

163 $

(1,429)

Year Ended December 31, 2021

Year Ended December 31, 2020

As
previously
reported

Adjustment

As
adjusted

As
previously
reported

Adjustment

As
adjusted

NET EARNINGS

COMPREHENSIVE INCOME ATTRIBUTABLE TO
ENSTAR

(in millions of U.S. dollars)

488 $

65 $

553 $

1,727 $

4 $

1,731

375 $

65 $

440 $

1,828 $

4 $

1,832

Consolidated Statements of Changes in Shareholders’ Equity

Retained Earnings

Balance, beginning of year

Net earnings

Balance, end of year

Year Ended December 31, 2022

As Computed
Under Previous
Method

Effect of
Accounting
Change

As Reported
Under New
Method

(in millions of U.S. dollars)

5,085 $

(1,108)

4,016 $

227 $

163

390 $

5,312

(945)

4,406

Year Ended December 31, 2021

Year Ended December 31, 2020

As
previously
reported

Adjustment

As
adjusted

As
previously
reported

Adjustment

As
adjusted

(in millions of U.S. dollars)

Retained Earnings

Balance, beginning of year

4,647 $

162 $

4,809 $

2,888 $

— $

Net earnings

Cumulative effect of change in accounting principle

488

—

553

—

1,727

(6)

158

2,888

1,731

152

Balance, end of year

5,085 $

227 $

5,312 $

4,647 $

162 $

4,809

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Item 8 | Notes to Consolidated Financial Statements | Note 9 - Deferred Charge Assets and Deferred Gain Liabilities

Consolidated Statements of Cash Flows

Net loss

Adjustments to reconcile net earnings to cash flows provided by operating activities:

Amortization of net deferred charge assets

Other operating assets and liabilities

Year Ended December 31, 2022

As Computed
Under Previous
Method

Effect of
Accounting
Change

As Reported
Under New
Method

(in millions of U.S. dollars)

(1,108) $

163 $

(945)

— $

80 $

(174) $

(243) $

(417)

Year Ended December 31, 2021

Year Ended December 31, 2020

As
previously
reported

Adjustment

As
adjusted

As
previously
reported

Adjustment

As
adjusted

Net earnings

Adjustments to reconcile net earnings to cash flows
provided by operating activities:

Amortization of net deferred charge assets

Other operating assets and liabilities(1)

(in millions of U.S. dollars)

488 $

65 $

553 $

1,727 $

4 $

1,731

— $

55 $

— $

838 $

(120) $

718 $

412 $

39 $

(43) $

369

(1) As previously reported changes in other operating assets and liabilities for the years ended December 31, 2021 and 2020 includes changes

in premiums receivable of $324 million and $23 million, respectively.

The following tables provide a summary of the effect of the change in accounting policy on our 2022 and previously
reported consolidated reconciliation of beginning and ending liability for losses and LAE:

DCAs on retroactive reinsurance

Net balance as of January 1

Net incurred losses and LAE:

Prior periods:

Amortization of DCAs

Total prior periods

Total net incurred losses and LAE

Other changes:

Assumed business(1)

Total other changes

Net balance as of December 31

DCAs on retroactive reinsurance

Year Ended December 31, 2022

As Computed
Under
Previous
Method

Effect of
Accounting
Change

As Reported
Under New
Method

(in millions of U.S. dollars)

(371) $

371 $

—

11,555

371

11,926

243

(513)

(465)

2,520

2,333

11,743

(243)

140

268

268 $

(268) $

—

(756)

(708)

2,660

2,473

12,011

—

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Item 8 | Notes to Consolidated Financial Statements | Note 9 - Deferred Charge Assets and Deferred Gain Liabilities

Year Ended December 31, 2021

Year Ended December 31, 2020

As previously
reported

Adjustment

As adjusted

As previously
reported

Adjustment

As adjusted

(in millions of U.S. dollars)

DCAs on retroactive reinsurance

(219) $

219 $

— $

(260) $

260 $

Net balance as of January 1

Net incurred losses and LAE:

Prior periods:

Amortization of DCAs

Total prior periods

Total net incurred losses and LAE

Other changes:

Effect of exchange rate movement

Acquired business(2)

Assumed business(1)

Ceded business(3)

Total other changes

Net balance as of December 31

8,709

219

8,928

7,679

260

120

(283)

(111)

—

1,098

3,445

(92)

4,388

11,555

(120)

—

254

—

(403)

(231)

—

1,127

3,699

416

120

—

2,186

(11)

(103)

(155)

272

371

4,660

11,926

1,934

8,544

(43)

(1)

—

(9)

219

DCAs on retroactive reinsurance

371 $

(371) $

— $

219 $

(219) $

—

7,939

—

(32)

373

119

—

2,198

(164)

1,936

8,763

—

(1) 2022, 2021 and 2020 assumed business is net of DCAs of $140 million, $254 million and $12 million, respectively.
(2)

2021 acquired business included $257 million of loss reserves which are deemed to effectively settle balances relating to pre-existing
relationships, the latter comprising of $286 million of reinsurance recoverables, partially offset by a DGL of $29 million, carried by two of our
reinsurance subsidiaries. The impact of the DGL has been adjusted in the above table.

(3)

2021 and 2020 ceded business is net of DGLs of $11 million and $9 million, respectively.

Additionally, all relevant notes to the financial statements have been updated for impacts of the change in
accounting policy.

Deferred Charge Assets and Deferred Gain Liabilities

The following table presents a reconciliation of the deferred charge assets and deferred gain liabilities for the years
ended December 31, 2022, 2021 and 2020:

Beginning carrying value

Recorded during the year

Realized on acquisition

Amortization

Ending carrying value

2022

DGL

DCA

Net

DCA

2021

DGL

Net

DCA

2020

DGL

Net

(in millions of U.S. dollars)

599 $

1 $

598 $

401 $

20 $

381 $

430 $

13 $

417

140

—

(81)

—

(1)

140

—

254

—

(29)

243

—

(80)

(56)

(1)

(55)

(41)

(2)

(39)

658 $

— $

658 $

599 $

1 $

598 $

401 $

20 $

381

For the years ended December 31, 2022 and 2021, we completed our assessment for impairment of deferred
charge assets and concluded that there had been no impairment of our carried deferred charge asset balances.

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

10. LOSSES AND LOSS ADJUSTMENT EXPENSES

The liability for losses and LAE, also referred to as loss reserves, represents our gross estimates before
reinsurance for unpaid reported losses (Outstanding Loss Reserves, or "OLR") and includes losses that have been
incurred but not yet reported ("IBNR") using actuarial methods. We recognize an asset for the portion of the liability
that we expect to recover from reinsurers. LAE reserves include allocated LAE ("ALAE") and unallocated LAE
("ULAE"). ALAE are linked to the settlement of an individual claim or loss, whereas ULAE are based on our
estimates of future costs to administer the claims. IBNR includes amounts for unreported claims, development on
known claims and reopened claims.

Our loss reserves cover multiple lines of business, including asbestos, environmental, general casualty, workers'
compensation, marine, aviation and transit, construction defect, professional indemnity/directors and officers, motor,
property and other non-life lines of business.

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

The table below provides a consolidated reconciliation of the beginning and ending liability for losses and LAE.

Table of Contents

Balance as of January 1
Losses and LAE relating to SGL No.1 (1)
Reinsurance reserves recoverable (2)
Reinsurance reserves recoverable relating to SGL No. 1 (1)
Cumulative effect of change in accounting principle on the determination of the
allowance for estimated uncollectible reinsurance balances

Net balance as of January 1

Net incurred losses and LAE:

Current period:

Increase in estimates of net ultimate losses

Increase in provisions for ULAE

Total current period

Prior periods:

Reduction in estimates of net ultimate losses

Reduction in provisions for ULAE
Amortization of fair value adjustments (3)
Changes in fair value - fair value option (4)

Total prior periods

Total net incurred losses and LAE

Net paid losses:

Current period

Prior periods

Total net paid losses

Other changes:

Effect of exchange rate movement
Acquired business (5)
Assumed business

Ceded business

Reclassification to assets and liabilities held-for-sale

Total other changes

Net balance as of December 31
Reinsurance reserves recoverable (2)
Balance as of December 31

Reconciliation to Consolidated Balance Sheet:

Loss and loss adjustment expenses

Loss and loss adjustment expenses, at fair value

Total

2022

2021

2020

(in millions of U.S. dollars)

13,258 $

10,593 $

9,868

—

255

—

(1,332)

(1,830)

(1,928)

—

11,926

(90)

—

8,928

—

(1)

7,939

(403)

(135)

(18)

(200)

(756)

(708)

168

172

(281)

(63)

(75)

(403)

(231)

(3)

(1,677)

(1,680)

(29)

(1,402)

(1,431)

(187)

(63)

—

2,660

—

2,473

12,011

996

1,127

3,699

(103)

—

4,660

11,926

1,332

388

405

(130)

(49)

119

(32)

373

(72)

(1,413)

(1,485)

119

—

2,198

(164)

(217)

1,936

8,763

1,830

13,007 $

13,258 $

10,593

11,721 $

11,269

1,286

1,989

13,007 $

13,258

(1) This balance represents our participation in Atrium's Syndicate 609 relating to the 2020 and prior underwriting years which is no longer

eliminated on our consolidated financial statements following the completion of the Exchange Transaction on January 1, 2021.

(2) Excludes paid losses recoverable.
(3) 2022 amortization of fair value adjustments includes accelerated amortization of $33 million representing the remaining risk margin fair value
adjustment liability originally recorded upon acquisition of the Enhanzed Re catastrophe reinsurance business. The liability was released
following the commutation of the catastrophe business back to Allianz.

(4) Comprises discount rate and risk margin components.

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

(5) 2021 acquired business of $1.1 billion includes $842 million of third party loss reserves and $257 million of loss reserves which are deemed to
effectively settle balances relating to pre-existing relationships, the latter comprising of $286 million of reinsurance recoverables carried by two
of our reinsurance subsidiaries. These pre-existing relationships were fair valued at $271 million in accordance with the acquisition method of
accounting.

Prior Period Development (“PPD”)

Reduction in Estimates of Net Ultimate Losses

The following table summarizes the (reductions) increases in estimates of net ultimate losses related to prior years
by segment and line of business:

Run-off segment:

Asbestos

Environmental

General casualty

Workers' compensation

Marine, aviation and transit

Construction defect

Professional indemnity/Directors and Officers

Motor

Property

All Other

Total Run-off segment

Total Assumed Life segment

Total Legacy Underwriting segment

Total

2022

2021

2020

(in millions of U.S. dollars)

(14) $

(6)

(318)

(56)

(25)

(10)

(35)

(22)

(355)

(52)

(403) $

(16) $

116

(234)

(47)

(33)

(31)

(45)

(37)

(277)

—

(4)

(281) $

(19)

(13)

(26)

(183)

(31)

(12)

148

(17)

(127)

—

(3)

(130)

2022: The reduction in estimates of net ultimate losses of $403 million related to prior periods was primarily driven
by net favorable development in the following Run-off segment lines of business:

Workers’ Compensation - The workers' compensation line of business experienced $318 million of favorable
development, most notably in our 2017 and 2019 to 2021 acquisition years, as a result of:

•

lower severity trends on certain existing claims;

reduced levels of expected frequency of claims for excess workers’ compensation;

favorable claim settlements, including accelerated and favorable claim settlement patterns on certain portfolios;
and

an ADC contract where the cedants have experienced continued favorable ground-up performance.

During 2022, we also completed 15 commutations that resulted in a net reduction of ultimate losses of $11 million in
our workers' compensation line of business.

Motor - The experience in our motor line was adverse by $74 million due to higher than expected claims severity
primarily on older liabilities and slower than expected claim settlement rates related to our 2020 acquisition year.

General Casualty - The experience in the general casualty reserves was adverse by $57 million, including adverse
development on an LPT portfolio from our 2020 acquisition year, partially offset by favorable development on certain
of our 2019 and 2021 ADC contracts. Notably,

• Our 2020 acquisition year general casualty liabilities experienced additional claim reporting latency and
unexpected increased severity on a small number of large New York Labor Law claims which resulted in
increased overall ultimate loss estimates.

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

• Our 2019 and 2021 acquisition year ADC general casualty liabilities show a continued pattern of ground up

favorable development which has resulted in lower estimates of our reserves for these exposures.

Marine, Aviation and Transit - The marine, aviation and transit line of business experienced $56 million of
favorable development as a result of favorable experience across a variety of claim types, related to the 2014, 2018
and 2019 acquisition years.

Our Assumed Life segment also experienced favorable claim activity on our 2021 acquisition year catastrophe
business. During 2022, we commuted back to Allianz the catastrophe reinsurance business originally ceded to
Enhanzed Re by Allianz and recognized a favorable commutation gain of $59 million, of which $26 million
contributed to a favorable reduction in estimates of net ultimate losses. The remaining $33 million represented the
accelerated amortization of the remaining fair value adjustment liability and is included within amortization of fair
value adjustments.

2021:

The reduction in estimates of net ultimate losses of $281 million related to prior periods was primarily driven by net
favorable development in the following Run-off segment lines of business:

• Workers’ Compensation - The workers' compensation line of business experienced a $234 million favorable
development as a result of reduced claims activity and favorable settlements on open claims in 2011 & prior
accident years in one portfolio as well as recent 2015 - 2018 accident years on another.

During 2021, we also completed 15 commutations that resulted in a net reduction of ultimate losses of
$10 million in our workers' compensation line of business.

• General Casualty - The experience in the general casualty reserves was adverse by $116 million. This was
partially due to an increase in opioid exposure from our 2020 acquisition year and increased expectations of
latent claims and a lengthening of the payment pattern related to our 2019 acquisition year.

During 2021, we also completed 18 commutations that resulted in a net reduction of ultimate losses of $2 million
in our general casualty line of business.

• Marine, Aviation and Transit - The marine, aviation and transit line of business experienced a $47 million

reduction in estimates of net ultimate losses due to favorable experience across a variety of claim types.

During 2021, we also completed 4 commutations that resulted in a net increase of ultimate losses of $1 million
in our marine, aviation and transit line of business.

• Motor - The experience in the motor line was adverse by $43 million due to higher-than-expected claims

severity relating to our 2020 acquisition year.

2020: The reduction in estimates of net ultimate losses of $130 million related to prior periods was primarily driven
by net favorable development in the following Run-off segment lines of business:

• Workers’ Compensation - The workers' compensation line of business experienced a $183 million reduction in
estimates of net ultimates losses as a result of favorable actual development versus expected development
across nearly all of our acquired companies and assumed portfolios.

During 2020, we paid net losses of $143 million and released case and LAE reserves of $177 million. This
represents a decline in reported losses of $34 million for the year.

As a result of the favorable claims development, we recorded a release of $149 million primarily attributed to a
settlement of an outwards reinsurance agreement resulting in the reduction in gross ultimate losses inuring to
our benefit.

During 2020, we also completed 10 commutations that resulted in a net reduction of ultimate losses of
$11 million in our workers' compensation line of business.

• Motor - The experience in the motor line was adverse by $148 million due to higher than expected severity. The
case reserves were significantly strengthened when we transferred the claim handling to a new third-party
administrator with specialist experience in commercial automobile exposures.

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Changes in Fair Value - Fair Value Option

During 2022, 2021 and 2020, changes in the fair value of liabilities related to assumed retroactive reinsurance
agreements for which we have elected the fair value option of $(200) million, $(75) million and $119 million,
respectively, were primarily driven by an increase in corporate bond yields in 2022 and 2021 and narrowing credit
spreads in corporate bond yields in 2020.

Reconciliation of the Net Liability for Losses and LAE, Prior to the Provision for Bad debt to the Gross
Liability for Losses and LAE included in the Consolidated Balance Sheet

The table below presents the reconciliation of the loss development tables disclosed further below to the liability for
losses and LAE in the consolidated balance sheet. Loss development tables that we presented are those that are
most significant to our financial statements.

December 31, 2022

Net Liability
for Losses
and LAE,
Prior to
Provision
for Bad Debt

Provision
for Bad Debt

Net Liability
for Losses
and LAE

Reinsurance
Recoverable
on
Liabilities
for Losses
and LAE

Gross
Liabilities
for Losses
and LAE

(in millions of U.S. dollars)

Presented in the loss development tables:

Run-off segment:

Asbestos
General casualty
Workers' compensation
Professional indemnity/Directors and Officers
Motor

1,608 $
4,247
2,174
1,249
375

Excluded from the loss development tables:

Run-off segment:
Environmental
Marine, aviation and transit
Construction defect
Property
Other

Total Run-off segment OLR and IBNR
Legacy Underwriting segment OLR and IBNR
ULAE
Fair value adjustments - acquired companies
Fair value adjustments - fair value option

Total

Loss Development Information

336
409
401
429
604
11,832
138
418
(124)
(294)
11,970 $

20 $

7
1
1
2

3
2
—
2
3
41
—
—
—
—
41 $

1,628 $
4,254
2,175
1,250
377

339
411
401
431
607
11,873
138
418
(124)
(294)
12,011 $

65 $

120
226
156
191

1,693
4,374
2,401
1,406
568

13
94
1
115
61
1,042
33
6
(6)
(79)
996 $

352
505
402
546
668
12,915
171
424
(130)
(373)
13,007

Methodology for Establishing Reserves (Excluding Asbestos and Environmental Claims)

We perform our analysis of loss reserves and IBNR by each portfolio that we have acquired. Exposures for each
portfolio are separated into homogenous reserving classes, generally lines of business, within each portfolio. Each
reserving class contains either direct insurance or assumed reinsurance reserves and groups of relatively similar
types of risks and exposures and lines of business written.

Based upon the exposure characteristics and the nature of available data for each individual reserving class, we
select loss development extrapolation methods to calculate an estimate of ultimate losses.

We establish our recorded reserves as an estimate of unpaid losses for each class primarily by utilizing actuarial
expertise and projection methods. The actuarial methodologies are selected after consideration of exposure
characteristics, data limitations, and strengths and weaknesses of each method applied.

We use generally accepted actuarial methodologies to estimate ultimate losses and LAE, including:

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

•

Cumulative Reported and Paid Loss Development Methods: The Cumulative Reported (Case Incurred)
Loss Development method estimates ultimate losses by multiplying cumulative reported losses (paid losses
plus case reserves) by a cumulative development factor.

Historical "age-to-age" loss development factors (“LDFs”) are calculated to measure the relative development of
an accident year from one maturity point to the next. Age-to-age LDFs are then selected based on these
historical factors. The selected age-to-age LDFs are used to project the ultimate losses.

The Cumulative Paid Loss Development Method is mechanically identical to the Cumulative Reported Loss
Development Method described above, but the paid method does not rely on case reserves or claim reporting
patterns in making projections.

Incremental Reported and Paid Loss Development Methods: Incremental incurred and paid analyses are
performed in cases where cumulative data is not available. The concept of the incremental loss development
methods is similar to the cumulative loss development methods described above, in that the pattern of historical
paid or incurred losses is used to project the remaining future development.

IBNR-to-Case Outstanding Method: This method requires the estimation of consistent cumulative paid and
reported (case) incurred loss development patterns and age-to-ultimate LDFs, either from data that is specific to
the segment being analyzed or from applicable benchmark or industry data. These patterns imply a specific
expected relationship between IBNR, including both development on known claims (bulk reserve) and losses on
true late reported claims, and reported case incurred losses.

Bornhuetter-Ferguson Expected Loss Projection Reported and Paid Methods: The Bornhuetter-Ferguson
Expected Loss Projection method produces expected unreported losses by multiplying the expected losses,
which are based on initial selected ultimate loss ratios by year, by the unreported percentage. The unreported
percentage is calculated as one minus the reciprocal of the selected cumulative incurred LDFs. Finally, the
expected unreported losses are added to the current reported losses to produce ultimate losses.

The calculations underlying the Bornhuetter-Ferguson Expected Loss Projection method based on paid loss
data are similar to the Bornhuetter-Ferguson calculations based on reported losses, with the exception that paid
losses and unpaid percentages replace reported losses and unreported percentages.

Reserve Run-off Method: This method first projects the future values of case reserves for all underwriting
years to future ages of development by selecting a run-off pattern of case reserves based on the observed run-
off ratios at each age of development. Once the ratios have been selected, they are used to project the future
values of case reserves.

A paid on reserve factor is selected in a similar way. The ratios of the observed amounts paid during each
development period to the respective case reserves at the beginning of the periods are used to estimate how
much will be paid on the case reserves during each development period. These paid on reserve factors are then
applied to the case reserve amounts that were projected during the first phase of this method. A summation of
the resulting paid amounts yields an estimate of the liability.

We also consider additional information, such as, but not limited to, changes in the legal, regulatory and judicial
environment; medical cost trends and general inflation; and adjust the estimate of ultimate losses as deemed
necessary.

Paid-to-date losses are then deducted from the estimate of ultimate losses and LAE to arrive at an estimated total
loss reserve, and reported outstanding case reserves are then deducted from estimated total loss reserves to
calculate the estimated IBNR reserve.

These estimates are reviewed regularly and, as experience develops and new information becomes known, the
reserves are adjusted as necessary. We generally perform a full review of each portfolio annually and additionally
we perform interim reviews quarterly to ascertain whether changes to claims paid or case reserve amounts have
varied from our expectations developed during the last annual reserve review. In this event, we consider the timing
and magnitude of the actual versus expected development and may record an interim adjustment to our recorded
reserves.

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Asbestos and Environmental Reserving Methodologies

The ultimate losses from A&E claims cannot be estimated using traditional actuarial reserving methods that
extrapolate losses to an ultimate basis using loss development, and therefore use alternative projection methods.
Claims are spread across multiple policy years, generally from 1985 and prior, based on the still evolving case law
in each jurisdiction, making historical development patterns unreliable to forecast the future claim payments.

As such, we estimate IBNR reserves for each of our portfolios with A&E exposures separately using the following
methodologies:

•

Paid Survival Ratio Method: In this method, our historical calendar year payments are examined to determine
an expected future annual average payment amount. This amount is multiplied by an expected number of future
payment years to estimate a reserve.

Trends in calendar year payment activity are considered when selecting an expected future annual average
payment amount (which is derived from an expected paid survival ratio) and accepted industry benchmarks are
used in determining an expected number of future payment years.

Paid Market Share Method: In this method, our estimated market share is applied to the industry estimated
unpaid losses or estimate of industry ultimate losses. The ratio of our historical calendar year payments to
industry historical calendar year payments is examined to estimate our market share. This ratio is then applied
to the estimate of industry unpaid losses or estimate of industry ultimate losses.

Reserve-to-Paid Method: In this method, the ratio of estimated industry reserves to industry paid-to-date
losses is multiplied by our paid-to-date losses to estimate our reserves.

IBNR - Case Ratio Method: In this method, the ratio of estimated industry IBNR reserves to industry case
reserves is multiplied by our case reserves to estimate our IBNR reserves.

Ultimate-to-Incurred Method: In this method, the ratio of estimated industry ultimate losses to industry
incurred-to-date losses is applied to our incurred-to-date losses to estimate our IBNR reserves.

Decay Factor Method: In this method, a decay factor is directly applied to our payment data to estimate future
payments. The decay factors were selected based on a review of our own decays and industry decays.

Asbestos Ground-up Exposure Analysis Using Frequency-Severity Method: This method is used when we
have policy and claim data at the defendant or claimant level. In a frequency-severity method there are two
components that need to be estimated, namely, (1) the number of claims that will ultimately be settled with
payment and (2) the severity of these claims including legal costs.

The estimate of future settled claims is based on the historical claim filing rates, historical claim dismissal rates,
current pending claims and epidemiological forecasts of asbestos disease incident for future claim filings.

The net liability for unpaid losses and LAE as of December 31, 2022 and 2021 included $2.0 billion and $2.3 billion,
respectively, which represented an estimate of the net ultimate liability for A&E claims. The gross liability for such
claims as of December 31, 2022 and 2021 was $2.0 billion and $2.4 billion, respectively.

The decrease of $291 million and $313 million on a net and gross basis, respectively, in 2022 was primarily due to
net paid losses during the year.

Disclosures of Incurred and Paid Loss Development, IBNR, Claims Counts and Payout Percentages

The loss development tables set forth our historic incurred and paid loss development through December 31, 2022,
net of reinsurance, as well as the cumulative number of reported claims, IBNR balances, and other supplementary
information for our segment lines of business with material net losses and LAE balances as of December 31, 2022.

The following factors are relevant to the loss development information presented in the tables below:

•

Level of Disaggregation: In addition to accident year, we have disaggregated the information in the loss
development tables by segment, line of business and acquisition year. We have presented only the last 10
years of portfolio acquisitions as we believe that the current activity on the preceding acquisition years is not
meaningful. We have presented only our Run-off segment as we retain no net economic interest in the activity
of our Legacy Underwriting segment. We have not presented empty rows where we did not acquire any
business for that combination of line of business, acquisition and accident year.

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Table of Contents

•

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

We present acquisition year information so that the impact of take-on positions from acquired and assumed
business (as described below) is additionally separated and provides a consistent trend of the development of
our ultimate loss reserves.

StarStone International: In 2014, we acquired an active underwriting business, Starstone Group. In 2020, we
sold the StarStone US business and effective January 1, 2021, StarStone International reserves totaling
$955 million were transferred from the Legacy Underwriting segment to the Run-off segment.

As such, on a prospective basis we have separately presented the Starstone International loss development
tables on a standalone basis from the date of acquisition (April 2014). Additionally, the loss development
information for StarStone International has been included in the Run-off segment loss development tables as an
acquisition in 2021. In both instances, we have aligned the StarStone International lines of business with the
Run-off segment lines of business.

Cessions to Enhanzed Re: As a result of the Step Acquisition of Enhanzed Re, the Run-off segment business
previously ceded to Enhanzed Re became subject to elimination upon consolidation. As such, the loss
development disclosures presented for the Run-off segment have been restated to exclude the historical
incurred and paid loss development related to these cessions.

Acquired and Assumed Business: Acquired and assumed net reserves arising from business acquisitions
and retroactive reinsurance agreements are included in the loss development tables on a prospective basis as
the loss reserves are effectively re-underwritten at the date that they are acquired or assumed.

We believe that the historical loss development prior to our acquisition is not relevant with respect to our own
experience managing these acquired loss reserves. Furthermore, the information required to prepare the loss
development disclosures on a retrospective basis is not always available to us or reliable.

Commutations and Policy Buybacks: The loss development tables include the net incurred effect of agreeing
a commutation or policy buyback in the year in which the commutation or policy buyback is contractually agreed
and the related settlement in the year in which it is paid or received.

We do not recast prior years to remove commuted or bought back claims, since this practice would eliminate
any historical favorable or adverse development we may have experienced on the commuted loss and LAE
reserves.

Net Liabilities for Losses and LAE and Net Paid Losses and LAE: The loss development tables include
reported case reserves and IBNR liabilities as well as cumulative paid losses, both of which include ALAE and
are net of reinsurance recoveries.

The loss development tables exclude ULAE, fair value adjustments related to both business acquisitions and
retroactive reinsurance agreements for which we have elected the fair value option as well as DCAs.

PPD: PPD included in the loss development tables is calculated as follows: i) for acquisition years 2021 and
prior, subtract the 2021 calendar year net cumulative incurred losses and ALAE from the 2022 calendar year for
all accident years excluding 2022; and ii) add the result of subtracting the 2022 acquisition year net reserves
acquired from the 2022 net cumulative incurred losses and ALE for all accident year excluding 2022.

Foreign Exchange: The loss development tables exclude the impact of foreign exchange rates. Historical
amounts are disclosed on a constant-currency basis, which is achieved by using constant foreign exchange
rates between years in the loss development tables, and translating prior year amounts denominated in
currencies other than the U.S. dollar, which is our reporting currency, using the closing exchange rates as of
December 31, 2022.

Reported Claim Counts: Reported claim counts are included in the loss development tables on a cumulative
basis. We measure claim frequency information on an individual claim count basis as follows:

◦

The claim frequency information includes direct and assumed open and closed claims at the claimant level.
Reported claims that are closed without a payment are included within our cumulative number of reported
claims because we typically incur claim adjustment expenses on them prior to their closure.

The claim count numbers exclude counts related to claims within policy deductibles where the insured is
responsible for the payment of losses within the deductible layer.

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

◦

Individual claim counts related to certain assumed reinsurance contracts such as excess-of-loss and quota
share treaties are not available to us, and the losses arising from these treaties have been treated as single
claims for the purposes of determining claim counts. Therefore, each treaty year within the reinsurance
contract is deemed a single claim because the detailed underlying individual claim information is generally
not reported to us by our cedants.

For certain insurance facilities and business produced or managed by managing general agents,
coverholders and third party administrators where the underlying claims data is reported to us in an
aggregated format, the information necessary to provide cumulative claims frequency is not available. In
such cases, we typically record a “block” claim in our system.

Our reported claim frequency information is subject to the following inherent limitations when analyzing our loss
experience and severity:

◦

Claim counts are presented only on a reported and not on an ultimate basis. Reported claim counts include
open claims which have outstanding reserves but excludes claim counts that may relate to IBNR. As such
the reported claims are consistent with reported losses, which can be calculated by subtracting IBNR losses
from incurred losses. However, the reported claim counts are inconsistent with the losses in the incurred
loss development tables, which include IBNR losses, and to losses in the paid loss development tables,
which exclude outstanding reserves.

Reported claim counts have not been adjusted for ceded reinsurance, which may distort any measures of
frequency or severity.

For lines of business that have a mix of primary and excess layer exposures, such as our general casualty
and workers’ compensation lines of business, the reported claim counts may fluctuate from period to period
between exposure layers, thereby distorting any measure of frequency and severity.

The use of our reported claim frequency information to project ultimate loss payouts by disaggregated
disclosure category or line of business may not be as meaningful as claim count information related to
individual contracts at a more granular level.

Annual Percentage Payout: Annual percentage payout disclosures are based on the payout of claims by age,
net of reinsurance. Claim age reflects the number of years that have lapsed since the original acquisition to the
date the claim is paid, or in the case of StarStone International, the number of years that have lapsed since the
claim’s accident year to the date the claims is paid.

There may be occasions where, due to our claims management strategies (including commutations and policy
buybacks) or due to the timing of claims payments relative to the associated recovery, the cash received from
reinsurance recoveries is greater than the cash paid out to our claimants, (i.e. a net recovery rather than a net
payout for a particular calendar year), thereby resulting in a negative annual percentage payout for that
calendar year.

Supplemental Information: The information related to net incurred and paid loss development for all calendar
years preceding the year ended December 31, 2022, as well as 2012 and prior accident year and all acquisition
year information (including net acquired reserves), and the related historical average claims payout percentage
disclosure is unaudited and is presented as supplementary information.

•

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Run-off Segment

Asbestos

Acquisition
Year

Accident
Year

Net
Acquired
Reserves

Net cumulative incurred losses and allocated loss adjustment expenses

For the years ended December 31

Year Ended
December 31,
2022

As of December 31,
2022

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

PPD

IBNR

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

Cumulative
number of
claims

2013

2016

2017

2018

2019

2021

2012 and
Prior

14 $ 14 $ 14 $ 14 $ 14 $ 14 $ 10 $

9 $ 10 $

1 $

214

2012 and
Prior

Grand
Total

507

842

366

386

506 565 563 582 632 635 635

—

168

2,118

774 724 760 769 751 739

(12)

442

5,996

1 —

(1)

367 354 356 355

(1)

115

1,519

386 385

(1)

166

2,059

2,169

$ 2,124 $

(14) $

900

11,937

Net cumulative paid losses and ALAE (from table below)

2013 to 2022 acquisition years - net liabilities for losses and ALAE

(681)

1,443

2012 and prior acquisition years - net liabilities for losses and ALAE / net increase (reduction) in estimates of net
ultimate losses related to prior years

165

—

Total net liabilities for losses and ALAE / net increase (reduction) in estimates of net ultimate losses related to prior
years

$ 1,608 $

(14)

Run-off Segment

Asbestos

Net cumulative paid losses and allocated loss adjustment expenses

For the years ended December 31

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

$ — $ — $ — $

1 $

2 $

3 $

71 124 183 228 268 299

80 118 157 193

(1)

(3)

(2)

89 135

$ 681

Acquisition
Year

Accident
Year

2013

2016

2017

2018

2019

2021

2012 and
Prior

Grand
Total

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Run-off Segment

Asbestos

Annual Percentage Payout of Incurred Losses since Year of Acquisition, Net of Reinsurance

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Acquisition Year

Unaudited

2013

2016

2017

2018

2019

2021

— %

10.00 %

— %

10.00 %

— %

10.00 %

3.15 %

8.03 %

8.35 %

9.29 %

7.09 %

6.30 %

4.88 %

2.17 %

4.33 %

5.14 %

5.28 %

4.87 %

— %

1.13 %

11.55 %

12.39 %

12.96 %

0.26 %

13.25 %

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

General Casualty

Net cumulative incurred losses and allocated loss adjustment
expenses

For the years ended December 31

Year
Ended
December
31, 2022

As of December
31, 2022

Acquisition
Year

Accident
Year

Net
Reserves
Acquired

Transfers
during
the year

Reclassed
Net
Reserves
Acquired 2013 2014 2015 2016 2017 2018 2019 2020 2021

2022

PPD

IBNR

Cumulative
number of
claims

2013

2014

2015

2016

2017

2018

2019

2012 and
Prior

2013

2014

Total

2012 and
Prior

2013

2014

2015

2016

2017

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

Total

2012 and
Prior

Total

2012 and
Prior

2013

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2022

Total

2012 and
Prior

2013

2014

2015

—

166

—

197

198

122

—

454

—

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

78 78 77 99 98 99 101 102 107 106

106

—

1 — — — —

—

1 — — — — — — —

—

— —

715

—

78 80 79 100 99 100 101 102 107 106

106

—

715

—

166

—

197

198

122

—

454

70 70 75 71 69

8 11

9 10

1 —

— — — — — — —

— — — — — —

— — — — —

79 82 84 81 81

62 61 63 60

29 34 36 36

20 23 27 29

9 11

— — — — —

—

(1)

— —

880

(2)

961

—

— —

—

4,838

781

1,166

1,345

250

—

121 129 137 140 158 161 162

165

8,430

(1)

1,787

175 158 143 139 137

135

1 — — — —

—

176 158 143 139 137

135

(2)

— —

(2)

353

359

—

50,408

(1)

(2)

—

1,681

1,695

2,537

2,719

436

187

429 453 443 449

461

59,700

—

(6)

(11)

(12)

2,365

821

768

1,305

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

General Casualty

Net cumulative incurred losses and allocated loss adjustment
expenses

For the years ended December 31

Year
Ended
December
31, 2022

As of December
31, 2022

Acquisition
Year

Accident
Year

Net
Reserves
Acquired

Transfers
during
the year

Reclassed
Net
Reserves
Acquired 2013 2014 2015 2016 2017 2018 2019 2020 2021

2022

PPD

IBNR

Cumulative
number of
claims

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

2019

2020(1)
2020(1)
2020(1)
2020(1)
2020(1)
2020(1)
2020(1)
2020(1)
2020(1)

2021

2022(1)
2022(1)
2022(1)
2022(1)
2022(1)
2022(1)
2022(1)
2022(1)

2016

2017

2018

2019

2020

2021

2022

Total

—

250

—

2012 and
Prior

124

(102)

2013

2014

2015

2016

2017

2018

2019

2020

142

144

143

203

(35)

(55)

(80)

(75)

(91)

(84)

(94)

—

Total

1,132

(616)

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

156

137

192

296

376

423

—

Total

1,755

—

2012 and
Prior

278

102

2013

2014

2015

2016

2017

2018

2019

155

163

214

246

—

250

109

516

156

137

192

296

376

423

—

1,755

380

130

174

230

254

298

340

Total

1,287

616

1,903

Grand
Total

$ 5,377 $

— $

5,377

— —

—

(2)

— —

2,634

1,910

402

241

138

243 237 285

272

(13)

168

10,710

108

(11)

182

191

238

347

458

521

350

456

490

507 494

565

224

3,233

160

152

(8)

148

1,048

140

202

305

371

427

130

197

324

414

479

—

(4)

(3)

(10)

108

(5)

157

245

339

432

(32)

— —

510

787

2,480

3,149

2,939

3,541

2,849

260

146

1,795 1,847

52 1,532

17,782

102

386

126

16,947

75 102

94 136

133

170

238

233

301

337

(1)

(4)

112

(21)

145

(3)

196

6,003

6,269

5,972

6,093

7,894

8,160

7,776

616 656 1,894

(9)

759

65,114

$ 5,525 $

111 $ 2,748

168,791

Net cumulative paid losses and ALAE (from table below)

2013 to 2022 acquisition years - net liabilities for losses and ALAE

(1,366)

4,159

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

General Casualty

Net cumulative incurred losses and allocated loss adjustment
expenses

For the years ended December 31

Year
Ended
December
31, 2022

As of December
31, 2022

Acquisition
Year

Accident
Year

Net
Reserves
Acquired

Transfers
during
the year

Reclassed
Net
Reserves
Acquired 2013 2014 2015 2016 2017 2018 2019 2020 2021

2022

PPD

IBNR

Cumulative
number of
claims

2012 and prior acquisition years - net liabilities for losses and ALAE / net increase (reduction) in estimates of net ultimate
losses related to prior years

(54)

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

Total net liabilities for losses and ALAE / net increase (reduction) in estimates of net ultimate losses related to prior years

$ 4,247 $

(1) During the year ended December 31, 2022, we entered into a LPT agreement with Aspen, which absorbed the Aspen ADC agreement we entered
into in 2020. As such, we have reclassified the net reserves acquired in acquisition year 2020 and the net cumulative incurred losses and allocated
loss adjustment expenses recorded through December 31, 2022 to acquisition year 2022.

Run-off Segment

General Casualty

Net cumulative paid losses and allocated loss adjustment expenses

For the years ended December 31

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

— — — —

— — —

89 114 127 131 143

99 105 111

—

49 145 222 285 328

Acquisition
Year

Accident
Year

2013

2014

2015

2016

2017

2018

2012 and
Prior

Total

2012 and
Prior

2013

2014

Total

2012 and
Prior

2013

2014

2015

2016

Total

2012 and
Prior

Total

2012 and
Prior

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

Total

2019

2012 and
Prior

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

General Casualty

Net cumulative paid losses and allocated loss adjustment expenses

For the years ended December 31

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

(2)

(1)

—

37 148 279

68 197

$ 1,366

Acquisition
Year

Accident
Year

2019

2020

2021

2022

2013

2014

2015

2016

2017

2018

2019

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

Total

Grand
Total

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

General Casualty

Annual Percentage Payout of Incurred Losses since Year of Acquisition, Net of Reinsurance

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year of Acquisition

Unaudited

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

4.72 % 16.04 % 20.75 % 12.26 % 16.98 %

8.49 %

4.72 %

0.94 %

6.60 %

— %

44.74 %

3.95 %

9.21 %

2.63 %

7.89 %

5.26 %

1.32 %

3.95 %

7.24 %

15.15 % 12.73 % 12.73 % 13.33 % 15.15 %

7.88 %

2.42 %

7.27 %

25.00 % 25.00 %

— % 25.00 % 25.00 % (25.00) % 12.50 %

24.44 % 24.44 % 14.81 %

9.63 %

4.44 %

10.63 % 20.82 % 16.70 % 13.67 %

9.33 %

7.35 %

6.25 %

3.68 %

5.88 %

6.55 % 19.65 % 23.19 %

3.68 %

6.98 %

4.12 %

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Run-off Segment

Workers' Compensation

Acquisition
Year

Accident
Year

Net
Reserves
Acquired

Net cumulative incurred losses and allocated loss adjustment expenses

For the years ended December 31

Year Ended
December 31,
2022

As of December 31,
2022

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

PPD

IBNR

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

Cumulative
number of
claims

418 $ 427 $ 426 $ 414 $ 402 $ 387 $ 371 $ 358 $ 347 $ 346 $ 344 $

(2) $

2013

2015

2016

2017

2018

2019

2020

2012 and
Prior

2013

2014

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

Total

2012 and
Prior

Total

2012 and
Prior

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

Total

2012 and
Prior

2014

2015

2016

2017

466

145

196

—

504

119

—

408

208

—

(9)

—

409 517 521 506 490 472 452 440 428 426 424

1,150

148

—

1,054 748 694 658 616 601 585 585

126 124 123 114 114 115 115 112

1 —

— — — — — —

— — — — —

1,389

1,291 973 917 869 825 814 798 793

466 434 471 457 399 392 389

104 112 117 110 104

185 187 186 191 177

— — —

—

71,115

5,634

172

76,921

11,722

—

2,457

3,955

5,280

10,722

2,251

36,397

—

10,533

2,816

851

1,311

1,295

1,211

1,084

887

383

—

(2)

—

(3)

(1)

—

(1)

—

(5)

(3)

(20)

(14)

(1)

(3)

(1)

—

496 486 471 468 450

(18)

124

9,839

119 119

— — — —

— — —

— —

(2)

—

(2)

(4)

(11)

—

11,512

2,392

3,238

4,236

5,003

2,418

369

407 410 325 302

(23)

254

29,185

121 105

—

(15)

—

(1)

—

(1)

—

Enstar Group Limited | 2022 Form 10-K

129

127

175

Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Run-off Segment

Workers' Compensation

Acquisition
Year

Accident
Year

Net
Reserves
Acquired

Net cumulative incurred losses and allocated loss adjustment expenses

For the years ended December 31

Year Ended
December 31,
2022

As of December 31,
2022

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

PPD

IBNR

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

Cumulative
number of
claims

2020

2021

2022

2018

2019

2020

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

289

993

—

203 173 158

(15)

333

668

1,225

2,561

929 756

(173)

213

12,211

(10)

—

(6)

(4)

(8)

(4)

(1)

(5)

—

201

324

2,824

1,362

2,273

4,685

4,210

Total

1,349

1,308 1,094

(217)

356

28,285

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

Total

Grand
Total

5,003

—

(1)

—

(2)

(4)

(5)

—

(1)

—

3,443

876

646

297

235

231

350

510

6,588

$ 3,733 $

(308) $

869

200,326

Net cumulative paid losses and ALAE (from table below)

2013 to 2022 acquisition years - net liabilities for losses and ALAE

(1,690)

2,043

2012 and prior acquisition years - net liabilities for losses and ALAE / net increase (reduction) in estimates of net
ultimate losses related to prior years

131

(10)

Total net liabilities for losses and ALAE / net increase (reduction) in estimates of net ultimate losses related to prior
years

$ 2,174 $

(318)

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176

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

Workers' Compensation

Net cumulative paid losses and allocated loss adjustment expenses

For the years ended December 31

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

111 $ 190 $ 242 $ 280 $ 291 $ 301 $ 306 $ 304 $ 310 $ 319

128

228

296

345

361

374

383

380

387

397

149

214

262

299

327

356

102

105

107

371

106

110

251

354

433

488

522

554

569

104

143

175

198

104

143

175

198

—

216

100

149

177

205

—

Acquisition
Year

Accident
Year

2013

2015

2016

2017

2018

2019

2020

2021

2012 and
Prior

2013

2014

Total

2012 and
Prior

2013

2014

2015

Total

2012 and
Prior

Total

2012 and
Prior

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

Total

2012 and
Prior

2014

2015

2016

2017

2018

Total

2012 and
Prior

2016

2017

2018

2019

2020

Total

2012 and
Prior

2013

2014

2015

2016

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

Workers' Compensation

Net cumulative paid losses and allocated loss adjustment expenses

For the years ended December 31

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

169

$ 1,690

Acquisition
Year

Accident
Year

2021

2017

2018

2019

2020

2021

Total

Grand
Total

Run-off Segment

Workers' Compensation

Annual Percentage Payout of Incurred Losses since Year of Acquisition, Net of Reinsurance

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year of Acquisition

Unaudited

2013

2015

2016

2017

2018

2019

2020

2021

2022

30.19 % 23.58 % 16.04 % 11.56 %

3.77 %

3.07 %

2.12 % (0.71) %

1.65 % 2.36 %

13.87 % 17.78 % 12.99 %

9.96 %

6.94 %

4.29 %

4.04 %

1.89 %

10.54 %

9.00 %

7.20 % 10.03 %

8.23 %

5.91 %

4.63 %

30.95 %

8.33 % 15.48 % 13.10 %

4.76 % (9.52) %

2.00 % 20.22 % 10.89 %

6.22 %

4.64 %

2.65 %

0.99 %

2.53 % 18.35 % 12.66 %

6.95 %

8.50 %

— %

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Run-off Segment

Professional Indemnity / Directors and Officers

Acquisition
Year

Accident
Year

Net
Reserves
Acquired

Transfers
during
the year

Reclassed
Net
Reserves
Acquired

Net cumulative incurred losses and allocated loss adjustment
expenses

For the years ended December 31

Year Ended
December
31, 2022

As of December
31, 2022

2014 2015 2016 2017 2018 2019

2020

2021

2022

PPD

IBNR

(in millions of U.S. dollars, except cumulative number of claims)

Cumulative
number of
claims

2014

2016

2018

2019

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

Total

2012 and
Prior

2013

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

—

104

115

—

115

293

—

474

—

Total

208

—

2020 (1)
2020 (1)
2020 (1)
2020 (1)
2020 (1)

2012 and
Prior

2013

2014

2015

2016

(6)

(7)

(12)

(16)

Unaudited

72 60 76 69 67 67 66

32 42 59 52 56 51 45

—

— — — — — — —

— — — — — —

— — — — —

— — — —

— — —

— —

—

3,921

1,628

548

— —

104 109 140 131 135 130 121

116

118

120

6,241

115

—

115

293

—

474

—

208

—

112 114 113 101

(3)

(4)

2,980

— — — — — — —

— —

112 114 113 101

(3)

(4)

2,982

288 251

234

231

211

(20)

62,498

56 49

61 64

61 68

35 39

—

— — — —

— —

—

5 —

1 —

— —

1 —

— —

3,388

3,674

3,800

2,171

195

504 479

490

489

485

(4)

75,774

— — —

— —

—

(3)

(1)

(7)

— —

—

11,166

3,570

3,972

4,727

5,430

3,088

362

210

200

208

201

(7)

32,437

— — —

1 —

— — —

— —

(1) —

— —

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Run-off Segment

Professional Indemnity / Directors and Officers

Acquisition
Year

Accident
Year

Net
Reserves
Acquired

Transfers
during
the year

Reclassed
Net
Reserves
Acquired

Net cumulative incurred losses and allocated loss adjustment
expenses

For the years ended December 31

Year Ended
December
31, 2022

As of December
31, 2022

2014 2015 2016 2017 2018 2019

2020

2021

2022

PPD

IBNR

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

Cumulative
number of
claims

2020 (1)
2020 (1)
2020 (1)
2020 (1)

2021

2022 (1)
2022 (1)
2022 (1)
2022 (1)
2022 (1)
2022 (1)
2022 (1)
2022 (1)

2017

2018

2019

2020

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

Total

Grand
Total

100

(16)

(13)

(68)

—

237

(154)

143

176

—

204

154

143

176

—

632

111

358

(1)

(2) —

133

120

163

186

(2)

(5)

—

(14)

(8)

(2)

(12)

(8)

(13)

104

(12)

—

114

150

481

4,121

1,037

1,454

1,702

2,022

3,405

2,993

3,171

150

289

217

615

571

(45)

345

20,561

22 —

140

(6)

(2)

(5)

(1)

1,427

638

904

1,436

2,773

3,523

3,958

5,072

154

165

442

136

19,731

$ 1,974 $

— $

1,974

$ 1,986 $

27 $ 542

158,207

Total

632

Net cumulative paid losses and ALAE (from table below)

2013 to 2022 acquisition years - net liabilities for losses and ALAE

(758)

1,228

2012 and prior acquisition years - net liabilities for losses and ALAE / net increase (reduction) in estimates of net ultimate
losses related to prior years

(37)

Total net liabilities for losses and ALAE / net increase (reduction) in estimates of net ultimate losses related to prior years

$ 1,249 $

(10)

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Acquisition
Year

Accident
Year

2014

2016

2018

2019

2020

2021

2022

2012 and
Prior

2013

2014

2015

Total

2012 and
Prior

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

Total

2013

2017

2018

2019

2020

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

Total

2012 and
Prior

2013

Run-off Segment

Professional Indemnity / Directors and Officers

Net cumulative paid losses and allocated loss adjustment expenses

For the years ended December 31

2014

2015

2016

2017

2018

2019

2020

2021

2022

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

—

— —

99 101

—

92 164 191 226 278

— —

86 113

—

(1) —

—

27 120

—

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

Professional Indemnity / Directors and Officers

Net cumulative paid losses and allocated loss adjustment expenses

For the years ended December 31

2014

2015

2016

2017

2018

2019

2020

2021

2022

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

$ 758

Acquisition
Year

Accident
Year

2022

2014

2016

2017

2018

2019

Total

Grand
Total

Run-off Segment

Professional Indemnity/Directors & Officers

Annual Percentage Payout of Incurred Losses since Year of Acquisition, Net of Reinsurance

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year of Acquisition

Unaudited

2014

2016

2018

2019

2020

2021

2022

32.50 %

21.67 %

10.83 %

9.78 %

10.87 %

11.96 %

(2.17) %

3.33 %

4.35 %

0.83 %

8.70 %

0.83 %

3.26 %

1.67 %

18.97 %

14.85 %

5.57 %

7.22 %

10.72 %

16.92 %

12.44 %

13.43 %

2.67 %

25.33 %

36.00 %

4.73 %

16.29 %

12.44 %

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

Motor

Acquisition
Year

Accident
Year

Net
Reserves
Acquired

Net cumulative incurred losses and allocated loss adjustment expenses

For the years ended December 31

Year Ended
December
31, 2022

As of December 31,
2022

2014

2015

2016

2017

2018

2019

2020

2021

2022

PPD

IBNR

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

Cumulative
number of
claims

2014

2015

2017

2018

2019

2020

2021

2012 and
Prior

2013

2014

2015

2016

2017

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

Total

2012 and
Prior

2013

2014

2015

2016

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

Total

2012 and
Prior

2013

Total

2015

2016

2017

2018

Total

2012 and
Prior

2013

2014

2015

—

115

114

121

104

101

181

—

808

—

154

250

455

— — — —

—

— — — — — — —

— — — — — —

— — — — —

1 — — — — —

— — — — —

— — — —

—

— —

— — — — —

106

103

110

117

112

110

101

107

101

100

101

102

181

158

160

161

115

100

103

167

(3)

—

(1)

—

(4)

(1)

—

(3)

—

1,683

443

2,134

315

817

668

1,385

229

3,433

114

164

3,557

1,179

1,140

1,336

1,185

2,843

3,731

1,200

749

776

759

753

770

16,171

— — —

186

215

397

415

628

682

—

231

469

754

(1)

Enstar Group Limited | 2022 Form 10-K

(2)

—

(2)

—

(2)

(3)

(5)

—

(1)

3,594

3,600

221

1,165

2,391

3,796

1,330

713

848

799

183

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

Motor

Net cumulative incurred losses and allocated loss adjustment expenses

For the years ended December 31

Year Ended
December
31, 2022

As of December 31,
2022

2014

2015

2016

2017

2018

2019

2020

2021

2022

PPD

IBNR

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

Cumulative
number of
claims

—

(3)

(2)

787

591

(24)

5,071

—

16,157

7,452

6,141

6,317

5,046

5,361

5,652

5,723

57,849

Acquisition
Year

Accident
Year

Net
Reserves
Acquired

2021

2022

2016

2017

2018

2019

2020

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

Total

—

Grand
Total

1,470

$ 1,743 $

67 $ 154

92,218

Net cumulative paid losses and ALAE (from table below)

2013 to 2022 acquisition years - net liabilities for losses and ALAE

2012 and prior acquisition years - net liabilities for losses and ALAE / net increase (reduction) in estimates of
net ultimate losses related to prior years

(1,386)

357

Total net liabilities for losses and ALAE / net increase (reduction) in estimates of net ultimate losses related to
prior years

375 $

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Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Acquisition
Year

Accident
Year

Run-off Segment

Motor

Net cumulative paid losses and allocated loss adjustment expenses

For the years ended December 31

2015

2016

2017

2018

2019

2020

2021

2022

(in millions of U.S. dollars, except cumulative number of claims)

Unaudited

2014

2015

2017

2018

2019

2020

2021

2012 and
Prior

2013

2014

Total

2012 and
Prior

2013

2014

2015

Total

2012 and
Prior

2013

2014

2015

2016

Total

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

Total

2012 and
Prior

Total

2015

2016

2017

2018

Total

2015

Total

Grand
Total

—

149

642

196

353

597

(2)

—

120

136

374

510

583

—

148

110

247

206

438

—

$ 1,386

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185

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Run-off Segment

Motor

Annual Percentage Payout of Incurred Losses since Year of Acquisition, Net of Reinsurance

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year of Acquisition

2014

2015

2017

2018

2019

2020

2021

2022

44.19 %

34.88 %

9.30 %

38.55 %

19.28 %

12.05 %

38.71 %

9.68 %

19.35 %

10.26 %

38.31 %

17.66 %

— %

5.88 %

17.65 %

27.32 %

30.77 %

21.09 %

(6.90) %

— %

Unaudited

4.65 %

3.61 %

6.45 %

7.66 %

6.98 %

8.43 %

6.45 %

9.48 %

5.88 %

— %

3.61 %

6.45 %

— %

2.41 %

1.20 %

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

StarStone International

As described above, the loss development information for StarStone International has been included in the Run-off
segment loss development tables above as an acquisition in 2021 and also presented separately on a standalone
basis from the date of acquisition (April 1, 2014) below.

Net Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance

For The Years Ended December 31,

For The Year
Ended
December 31,
2022

As of December 31, 2022

StarStone International

General Casualty

Accident
Year

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2014

2015

2016

2017

2018

2019

2020

2021

2022

PPD

IBNR(1)

(in millions of U.S. dollars, except cumulative number of claims)

(unaudited)

Cumulative
Number of
Claims

31 $

29 $

27 $

34 $

35 $

103

106

104

132

141

150

159

—

— $

—

(2)

—

(13)

—

5,980

3,371

3,976

3,523

3,626

3,646

2,627

1,684

818

127

Total $ 562 $

10 $

29,455

(1) Total of IBNR plus expected development on reported losses.

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance

Accident
Year

For The Years Ended December 31,

2014

2015

2016

2017

2018

2019

2020

2021

2022

2012 and
Prior

8 $

20 $

23 $

24 $

34 $

(unaudited)

2013

2014

2015

2016

2017

2018

2019

2020

118

129

Total $ 440

Total outstanding liabilities for unpaid losses and ALAE, net of reinsurance

$ 122

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

The reconciliation of incurred and paid loss development to the liability for unpaid losses and LAE as presented in
the tables above for the year ended December 31, 2022 is set forth below:

2022

(in millions of U.S. dollars)

Liabilities for unpaid losses and allocated LAE, net of reinsurance

Reinsurance recoverable on unpaid losses

Gross liability for unpaid losses and LAE before unallocated loss adjustment expenses and fair value adjustments $

122

153

The following is unaudited supplementary information for average annual historical duration of claims:

Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

General Casualty

3.80 % 14.21 % 18.08 % 15.51 % 11.47 % 11.08 %

5.78 %

3.96 %

6.87 %

2.65 %

Enstar Group Limited | 2022 Form 10-K

188

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

Table of Contents

Accident
Year

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

StarStone International

Workers' Compensation

Net Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance

For The Years Ended December 31,

For The
Year Ended
December
31, 2022

2014

2015

2016

2017

2018

2019

2020

2021

2022

PPD

(in millions of U.S. dollars, except cumulative number of claims)

(unaudited)

As of December 31,
2022

Cumulative
Number of
Claims

IBNR(1)

100 $

99 $

100 $

99 $

100 $

1 $

(1)

—

(1)

—

(5)

—

3,500

403

1,478

2,889

2,921

2,601

3,388

3,841

2,813

103

349 $

(12) $

23,950

(1) Total of IBNR plus expected development on reported losses.

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance

For The Years Ended December 31,

Accident
Year

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

2014

2015

2016

2017

2018

2019

2020

2021

2022

(unaudited)

98 $

99 $

—

Total outstanding liabilities for unpaid losses and ALAE, net of reinsurance

314

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189

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

The reconciliation of incurred and paid loss development to the liability for unpaid losses and LAE as presented in
the tables above for the year ended December 31, 2022 is set forth below:

Table of Contents

Liabilities for unpaid losses and allocated LAE, net of reinsurance

Reinsurance recoverable on unpaid losses

Gross liability for unpaid losses and LAE before ULAE and fair value adjustments

2022

(in millions of U.S. dollars)

The following is unaudited supplementary information for average annual historical duration of claims:

Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9 Year 10

Workers Compensation

17.05 % 35.42 % 15.36 % 8.09 % 4.11 % 1.07 % 0.96 % 1.67 %

— % 16.67 %

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

StarStone International

Professional Indemnity / Directors and Officers

Net Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance

For The Years Ended December 31,

For The Year
Ended
December 31,
2022

As of December 31, 2022

Accident
Year

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2014

2015

2016

2017

2018

2019

2020

2021

2022

PPD

IBNR(1)

(in millions of U.S. dollars, except cumulative number of claims)

(unaudited)

Cumulative
Number of
Claims

18 $

14 $

19 $

22 $

24 $

22 $

— $

(3)

—

(2)

—

(1)

—

1,652

1,346

929

1,175

835

970

1,153

1,230

838

231

$ 256 $

(1) $

10,420

(1) Total of IBNR plus expected development on reported losses.

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance

Accident
Year

2012 and
Prior

2013

2014

2015

2016

2017

2018

2019

2020

2021

For The Years Ended December 31,

2014

2015

2016

2017

2018

2019

2020

2021

2022

(unaudited)

10 $

11 $

12 $

18 $

—

Total outstanding liabilities for unpaid losses and ALAE, net of reinsurance

$ 152

$ 104

Enstar Group Limited | 2022 Form 10-K

191

Item 8 | Notes to Consolidated Financial Statements | Note 10 - Losses and Loss Adjustment Expenses

The reconciliation of incurred and paid loss development to the liability for unpaid losses and LAE as presented in
the tables above for the year ended December 31, 2022 is set forth below:

Table of Contents

Liabilities for unpaid losses and allocated LAE, net of reinsurance

Reinsurance recoverable on unpaid losses

Gross liability for unpaid losses and LAE before ULAE and fair value adjustments

2022

(in millions of U.S. dollars)

104

114

The following is unaudited supplementary information for average annual historical duration of claims:

Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Professional Indemnity /
Directors and Officers

6.76 % 16.83 % 12.66 % 10.96 %

9.51 %

6.92 %

3.79 %

2.89 %

3.03 %

— %

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 11 - Future Policyholder Benefits

Table of Contents

11. FUTURE POLICYHOLDER BENEFITS

The provision for future policyholder benefits includes provisions for life contingent liabilities assumed as well as
other policy benefits for insureds. The future policyholder benefits are equal to the present value of the future
benefits payments and related expenses less the present value of future net premiums.

The mortality assumptions are based on cedant historical data, regional mortality tables, and industry standards.
The present value of the liabilities are discounted utilizing the discount rate derived from the yield on the assets
supporting the liabilities and may include certain reinvestment assumptions. The future policyholder benefits related
to traditional annuity products include provisions for adverse deviation.

The carrying value of the provision for future policyholder benefits as of December 31, 2022 and 2021 was as
follows:

Deferred life contingent annuities
Whole of life reversion annuities

In-payment annuities

Total

2022

2021

(in millions of U.S. dollars)

196 $
127

861

1,184 $

294
165

1,043

1,502

As of December 31, 2022 and 2021, we had future policyholder benefit liabilities of $1.2 billion and $1.5 billion,
respectively. The decrease of $318 million was primarily due to foreign currency translation following the
strengthening of the U.S. dollar against the Euro.

We believe that the assumptions used represent a realistic and appropriate basis for estimating the provision for
future policyholder benefits as of December 31, 2022. However, these assumptions are subject to change and we
regularly review and adjust our estimates and provisioning methodologies taking into account all currently known
information and updated assumptions relating to unknown information.

In November 2022, we completed a novation of all of our life contingent liabilities and other policy benefits pursuant
to the Master Agreement we entered into with Allianz. The impact of the novation will be reflected in our first quarter
2023 results as we report the results of Enhanzed Re on a one quarter reporting lag37.

37 Refer to Note 26 for further information.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 12 - Defendant Asbestos and Environmental Liabilities

12. DEFENDANT ASBESTOS AND ENVIRONMENTAL LIABILITIES

We acquired DCo and Morse TEC in 2016 and 2019, respectively. These companies hold liabilities associated with
personal injury asbestos claims and environmental claims arising from their legacy manufacturing operations. DCo
and Morse TEC continue to process asbestos personal injury claims.

Defendant A&E liabilities on our consolidated balance sheets include amounts for indemnity and defense costs for
pending and future asbestos-related claims, determined using actuarial methods for asbestos-related exposures.

Defendant A&E liabilities also include amounts for environmental liabilities, associated with DCo's and Morse TEC's
properties, relating to estimated clean-up costs associated with the acquired companies' former operations based
on engineering reports.

Insurance balances recoverable on our consolidated balance sheets include estimated insurance recoveries relating
to our defendant asbestos liabilities. The recorded asset represents our assessment of the capacity of the insurance
agreements to indemnify our subsidiaries for the anticipated defense and loss payments for pending claims and
projected future claims.

The recognition of these recoveries is based on an assessment of the right to recover under the respective
contracts and on the financial strength of the insurers. The recorded asset does not represent the limits of our
insurance coverage, but rather the amount we would expect to recover if the accrued and projected loss and
defense costs were paid in full.

Included within insurance balances recoverable and defendant A&E liabilities are the fair value adjustments that
were initially recognized upon acquisition. These fair value adjustments are amortized in proportion to the actual
payout of claims and recoveries.

The carrying value of the defendant A&E liabilities, insurance recoveries, future estimated expenses and the fair
value adjustments related to DCo and Morse TEC as of December 31, 2022 and 2021 was as follows:

2022

2021

(in millions of U.S. dollars)

Defendant A&E liabilities:

Defendant asbestos liabilities

Defendant environmental liabilities

Estimated future expenses

Fair value adjustments

Defendant A&E liabilities

Insurance balances recoverable:

Insurance recoveries related to defendant asbestos liabilities (net of allowance: 2022 - $5;
2021 - $5)

Fair value adjustments

Insurance balances recoverable

786 $

(224)

607

224

(47)

177

Net liabilities relating to defendant A&E exposures

430 $

826

(236)

638

264

(51)

213

425

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 12 - Defendant Asbestos and Environmental Liabilities

The table below provides a consolidated reconciliation of the beginning and ending liability for defendant A&E
liabilities for the years ended December 31, 2022, 2021 and 2020:

Table of Contents

2022

2021

2020

(in millions of U.S. dollars)

Balance as of January 1

Insurance balances recoverable

638 $

706 $

(213)

(250)

Cumulative effect of change in accounting principle on the determination of the
allowance for estimated uncollectible insurance balances

Net balance as of January 1

Amounts recorded in other expense (income):

Reduction in estimate of net ultimate liabilities

Reduction in estimated future expenses

Amortization of fair value adjustments

Total other expense (income)

Total net recoveries (paid claims)

Net balance as of December 31

Insurance balances recoverable

Balance as of December 31

—

425

(2)

(1)

430

177

—

456

(38)

(5)

(27)

(4)

425

213

607 $

638 $

848

(449)

402

(103)

(9)

(100)

154

456

250

706

Total other expense from our defendant A&E liabilities was $4 million for the year ended December 31, 2022,
primarily due to the amortization of fair value adjustments and partially offset by favorable changes in the estimate
of liabilities and future expenses

Total other income was $27 million for the year ended December 31, 2021, driven by a reduction in the actuarially
estimated ultimate net liabilities as a result of a decline in mesothelioma filings.

Total other income was $100 million for the year ended December 31, 2020 and was driven by a reduction in the
actuarially estimated ultimate net liabilities as a result of a lower than expected number of asbestos claims filed
against us, lower than expected paid indemnity and defense costs, and the net collection of disputed insurance
recoveries.

Methodologies for determining liabilities

Defendant Asbestos Liabilities

We review, on an ongoing basis, our own experience in handling asbestos-related claims and trends affecting
asbestos-related claims in the U.S. tort system generally, for the purposes of assessing the value of pending
asbestos-related claims and the number and value of those that may be asserted in the future, as well as potential
recoveries from our insurance carriers with respect to such claims and defense costs.

The actuarial analysis for these asbestos-related exposures utilizes data resulting from claim experience, including
input from national coordinating counsel and local counsel, and includes the development of an estimate of the
potential value of asbestos-related claims asserted but not yet resolved as well as the number and potential value of
asbestos-related claims not yet asserted.

In developing the estimate of liability for potential future claims, the actuarial methods project the potential number
of future claims based on our historical claim filings and health studies. The actuarial methods also utilize
assumptions based on our historical proportion of claims resolved without payment, historical claim resolution costs
for those claims that result in a payment, and historical defense costs. The liabilities are estimated by using pending
and projected future claim filings, projected payments rates, average claim resolution amounts and an estimate for
defense costs, which is derived based on assumptions relating to defense costs to indemnity cost ratios. We utilize
judgment when determining the assumptions related to projected future claims filings, projected payment rates and
estimated defense costs.

We determine, based on the factors described above, including the actuarial analysis, that their best estimate of the
aggregate liability both for asbestos-related claims asserted but not yet resolved and potential asbestos-related

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 12 - Defendant Asbestos and Environmental Liabilities

claims not yet asserted, including estimated defense costs, was $786 million and $826 million as of December 31,
2022 and 2021, respectively.

Defendant Environmental Liabilities

As a result of our acquisition of DCo and Morse TEC, we have been identified by the United States Environmental
Protection Agency and certain U.S. state environmental agencies and private parties as potentially responsible
parties ("PRP") at various hazardous waste disposal sites under the Comprehensive Environmental Response,
Compensation and Liability Act ("Superfund") and equivalent U.S. state laws.

The PRPs may currently be liable for the cost of clean-up and other remedial activities at 27 such sites.
Responsibility for clean-up and other remedial activities at a Superfund site is typically shared among PRPs based
on an allocation formula.

We have a liability for defendant environmental liabilities of $10 million and $11 million as of December 31, 2022
and 2021, respectively. The estimate for defendant environmental liabilities is based on information available to us,
including an estimate of the allocation of liability among PRPs, the probability that other PRPs will pay the cost
apportioned to them, currently available information from PRPs and/or federal or state environmental agencies
concerning the scope of contamination and estimated remediation and consulting costs, and remediation
alternatives.

Allowance for Estimated Uncollectible Insurance Balances Recoverable on Defendant Asbestos Liabilities

We maintained a beginning and ending allowance for estimated uncollectible insurance balances related to our
defendant asbestos liabilities of $5 million for the years ended December 31, 2022 and 2021.

During the years ended December 31, 2022 and 2021, we did not have any new provisions, write-offs charged
against the allowance for estimated uncollectible insurance or any recoveries of amounts previously written off.

We did not have significant non-disputed past due balances receivable from our insurers related to our defendant
asbestos liabilities, that were older than one year for any of the periods presented. Any balances that are part of
ongoing legal activity are estimated to be recovered at the level of our recorded asset which is consistent with our
legal advice and past collection experience.

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 13 - Fair Value Measurements

Table of Contents

13. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the "exit
price") in an orderly transaction between market participants. We use a fair value hierarchy that gives the highest
priority to quoted prices in active markets and the lowest priority to unobservable data. The hierarchy is broken
down into three levels as follows:

•

Level 1 - Valuations based on unadjusted quoted prices in active markets that we have the ability to access for
identical assets or liabilities. Valuation adjustments and block discounts are not applied to Level 1 instruments.

Level 2 - Valuations based on quoted prices in active markets for similar assets or liabilities, quoted prices for
identical assets or liabilities in inactive markets, or significant inputs that are observable (e.g. interest rates, yield
curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market
data.

Level 3 - Valuations based on unobservable inputs where there is little or no market activity. Unadjusted third
party pricing sources or management's assumptions and internal valuation models may be used to determine the
fair values.

In addition, certain of our other investments are measured at fair value using net asset value ("NAV") per share (or
its equivalent) as a practical expedient and have not been classified within the fair value hierarchy above.

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 13 - Fair Value Measurements

We have categorized our assets and liabilities that are recorded at fair value on a recurring basis among levels
based on the observability of inputs, or at fair value using NAV per share (or its equivalent) as follows:

Table of Contents

December 31, 2022

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Other Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Fair Value
Based on NAV
as Practical
Expedient

Total Fair
Value

(in millions of U.S. dollars)

Investments:

Short-term and Fixed maturity
investments:

U.S. government and agency

— $

516 $

— $

U.K. government

Other government

Corporate

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

Structured products

Other assets included within funds held
- directly managed

Equities:

Publicly traded equity investments

Exchange-traded funds

Privately held equity investments

Other investments:

Hedge funds

Fixed income funds

Equity funds

Private equity funds

CLO equities

CLO equity funds

Private credit funds

Real estate fund

Total Investments

Reinsurance balances recoverable
on paid and unpaid losses:

Funds held by reinsured companies:

Other Assets:

Derivatives qualifying as hedging

Derivatives not qualifying as hedges

Derivative instruments

Losses and LAE:

Other Liabilities:

Derivatives qualifying as hedging

Derivatives not qualifying as hedges

Derivative instruments

—

351

507

—

858

—

462

5,286

211

552

1,022

914

586

9,631

—

148

—

241

—

319

—

549

457

—

1,282

—

203

362

202

3,055

858 $

9,960 $

319 $

3,094 $

— $

—

— $

—

— $

1 $

6 $

275 $

44 $

— $

—

— $

1,286 $

11 $

12 $

— $

—

— $

—

— $

—

— $

516

462

5,286

211

552

1,022

914

586

9,631

385

507

358

1,250

549

547

1,282

148

203

362

202

3,296

14,231

275

1,286

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 13 - Fair Value Measurements

Table of Contents

December 31, 2021

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Other Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Fair Value
Based on NAV
as Practical
Expedient

Total Fair
Value

(in millions of U.S. dollars)

Investments:

Short-term and Fixed maturity
investments:

U.S. government and agency

— $

747 $

— $

U.K government

Other government

Corporate

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

Structured products

Other assets included within funds held
- directly managed

Equities:

Publicly traded equity investments

Exchange-traded funds

Privately held equity investments

Other investments:

Hedge funds

Fixed income funds

Equity funds

Private equity funds

CLO equities

CLO equity funds

Private credit funds

Real estate fund

Total Investments

Reinsurance balances recoverable
on paid and unpaid losses:

Other Assets:

Derivatives not qualifying as hedges

Derivative instruments

Losses and LAE:

Other Liabilities:

Derivatives qualifying as hedging

Derivatives not qualifying as hedges

Derivative instruments

—

239

1,342

—

1,581

—

663

6,814

286

610

1,074

944

1,033

12,254

201

—

231

—

161

—

397

—

347

—

291

342

—

752

—

207

275

1,936

1,581 $

12,894 $

347 $

1,961 $

747

663

6,814

286

610

1,074

944

1,033

12,254

201

281

1,342

372

1,995

291

573

752

161

207

275

2,333

16,783

— $

432 $

— $

432

—

— $

—

— $

2 $

—

— $

1,989 $

7 $

17 $

— $

—

— $

—

— $

—

— $

1,989

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 13 - Fair Value Measurements

Valuation Methodologies of Financial Instruments Measured at Fair Value

Short-term and Fixed Maturity Investments

The fair values for all securities in the short-term and fixed maturity investments and funds held - directly managed
portfolios are obtained or validated from independent pricing services either directly or through our accounting
service provider or investment managers.

We record the unadjusted price and validate this price through a process that includes, but is not limited to:

comparison of prices against alternative pricing sources;

ii. quantitative analysis (e.g. comparing the quarterly return for each managed portfolio to its target benchmark);

iii. evaluation of methodologies used by external parties to estimate fair value, including a review of the inputs used

for pricing; and

iv. comparing the price to our knowledge of the current investment market.

Our internal price validation procedures and review of fair value methodology documentation provided by
independent pricing services have not historically resulted in adjustment in the prices obtained from the pricing
service.

The independent pricing services used by our service providers obtain actual transaction prices for securities that
have quoted prices in active markets. Where we utilize single unadjusted broker-dealer quotes, they are generally
provided by market makers or broker-dealers who are recognized as market participants in the markets for which
they are providing the quotes.

For determining the fair value of securities that are not actively traded, in general, pricing services use "matrix
pricing" in which the independent pricing service uses observable market inputs including, but not limited to,
reported trades, benchmark yields, broker-dealer quotes, interest rates, prepayment speeds, default rates and other
such inputs as are available from market sources to determine a reasonable fair value.

The following describes the techniques generally used to determine the fair value of our short-term and fixed
maturity investments by asset class, including the investments underlying the funds held - directly managed.

•

U.S. and non-U.S. government and agency securities consist of securities issued by the U.S. Treasury and
mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation and other agencies, or consist of bonds issued by non-U.S. governments and agencies
along with supranational organizations. The significant inputs used to determine the fair value of these
securities include the spread above the risk-free yield curve, reported trades and broker-dealer quotes. These
are considered to be observable market inputs and, therefore, the fair values of these securities are classified
as Level 2.

Corporate securities consist primarily of investment-grade debt of a wide variety of corporate issuers and
industries. The fair values of these securities are determined using the spread above the risk-free yield curve,
reported trades, broker-dealer quotes, benchmark yields, and industry and market indicators. These are
considered observable market inputs and, therefore, the fair values of these securities are classified as Level 2.

• Municipal securities consist primarily of bonds issued by U.S.-domiciled state and municipal entities. The fair
values of these securities are determined using the spread above the risk-free yield curve, reported trades,
broker-dealer quotes and benchmark yields. These are considered observable market inputs and therefore the
fair values of these securities are classified as Level 2.

•

Asset-backed and commercial and residential mortgage-backed securities consist primarily of investment-
grade bonds backed by pools of loans with a variety of underlying collateral. Residential and commercial
mortgage-backed securities include both agency and non-agency originated securities. The significant inputs
used to determine the fair value of these securities include the spread above the risk-free yield curve, reported
trades, benchmark yields, prepayment speeds and default rates. These are considered observable market
inputs and therefore the fair value of these securities are classified as Level 2.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 13 - Fair Value Measurements

•

Structured products consist of funds withheld securities which are utilized to achieve asset-liability matching
requirements and to reduce our exposure to credit risk. We utilize observable benchmark yields, issue spreads,
issuer credit ratings, loss given default rates, and probability of default rates to discount the future cash flows to
derive the fair value of these investments. These are considered observable market inputs and, therefore, the
fair values of these securities are classified as Level 2.

Equities

Our investments in equities consist of a combination of publicly traded and privately held investments. Our publicly
traded equity investments in common and preferred stocks predominantly trade on major exchanges and are
managed by our external advisors. Our exchange-traded funds also trade on major exchanges.

Our publicly traded equities are widely diversified and there is no significant concentration in any specific industry.
We use an internationally recognized pricing service to estimate the fair value of our publicly traded equities and
exchange-traded funds. We have categorized the majority of our publicly traded equity investments, other than
preferred stock, and our exchange-traded funds as Level 1 investments because the fair values of these
investments are based on unadjusted quoted prices in active markets for identical assets. Two equity securities
trade in an inactive market and, as a result have been classified as Level 2. The fair value estimates of our
investments in publicly traded preferred stock are based on observable market data and, as a result, have been
categorized as Level 2.

Our privately held equity investments in common and preferred stocks are direct investments in companies that we
believe offer attractive risk adjusted returns and/or offer other strategic advantages. Each investment may have its
own unique terms and conditions and there may be restrictions on disposals. The market for these investments is
illiquid and there is no active market. For the majority of these we use a combination of cost, internal models and
reported values from co-investors/managers to calculate the fair value of the privately held equity investments. The
fair value estimates of these are based on unobservable market data so have been categorized as Level 3. We also
have one direct investment in the equity of a privately held business development company which values its
underlying investments using NAV as a practical expedient; therefore, the investment has not been categorized
within the fair value hierarchy.

Other investments, at fair value

We have ongoing due diligence processes with respect to the other investments carried at fair value in which we
invest, including active discussions with managers of the investments. These processes are designed to assist us in
assessing the quality of information provided by, or on behalf of, each fund and in determining whether such
information continues to be reliable or whether further review is warranted.

Certain funds do not provide full transparency of their underlying holdings; however, we obtain the audited financial
statements for funds annually and review the audited results relative to the net asset values provided by the
managers, and regularly review and discuss the fund performance with the fund managers to corroborate the
reasonableness of the reported NAV.

The use of NAV as an estimate of the fair value for investments in certain entities that calculate NAV is a permitted
practical expedient. Due to the time lag in the NAV reported by certain fund managers we adjust the valuation for
capital calls and distributions. Other investments measured at fair value using NAV as a practical expedient have
not been classified in the fair value hierarchy. Other investments for which we do not use NAV as a practical
expedient have been valued using prices from independent pricing services and investment managers.

The following describes the techniques generally used to determine the fair value of our other investments.

•

For our investments in hedge funds, private equity funds, CLO equity funds, private credit funds and the real
estate debt fund, we primarily measure fair value by obtaining the most recently available NAV as advised by
the external fund manager or third-party administrator. The fair values of these investments are measured using
the NAV as a practical expedient and therefore have not been categorized within the fair value hierarchy.

• Our investments in fixed income funds and equity funds are valued based on a combination of prices from
independent pricing services, external fund managers or third-party administrators. For the publicly available
prices we have classified the investments as Level 2. For the non-publicly available prices we are using NAV as
a practical expedient and therefore these have not been categorized within the fair value hierarchy.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 13 - Fair Value Measurements

• We measure the fair value of our direct investment in CLO equities based on valuations provided by
independent pricing services. The fair values measured using prices provided by independent pricing services
have been classified as Level 2.

Insurance Contracts - Fair Value Option

The Company uses an internal model to calculate the fair value of the liability for losses and LAE and reinsurance
balances recoverable on paid and unpaid losses for certain retroactive reinsurance contracts where we have
elected the fair value option.

The fair value was calculated as the aggregate of discounted cash flows plus a risk margin. The discounted cash
flow approach uses:

estimated nominal cash flows based upon an appropriate payment pattern developed in accordance with
actuarial methods; and

ii. a discount rate based upon a high quality rated corporate bond yield plus a credit spread for non-performance

risk.

The model uses corporate bond rates across the yield curve depending on the estimated timing of the future cash
flows and specific to the currency of the risk.

The risk margin was calculated using the present value of the cost of capital. The cost of capital approach uses:

projected capital requirements;

ii. multiplied by the risk cost of capital representing the return required for non-hedgeable risk based upon the

weighted average cost of capital less investment income; and

iii. discounted using the weighted average cost of capital.

Derivative Instruments

The fair values of our derivative instruments are classified as Level 2. The fair values are based upon prices in
active markets for identical contracts.

Funds Held by Reinsured Companies

The fair value of the embedded derivative representing the contractually agreed variable return on the funds held by
reinsured companies associated with the Aspen LPT transaction is classified as Level 3 and is calculated using an
internal model.

The fair value is calculated as the difference between:

ii.

the present value of all future expected interest payments based on the full crediting rate, calculated using a
Monte Carlo simulation model; and

the present value of all future expected interest payments based on the base crediting rate, calculated using a
discounted cash flow model.

The Monte Carlo simulation model uses:

a continuous forward risk-free rate commensurate with the crediting interest rate period (observable); and

ii. an estimated historical volatility rate based upon the annualized standard deviation of daily log returns observed
on a portfolio replicating the Aspen investment portfolio over a period commensurate with the crediting rate
period (unobservable).

The discounted cash flow model uses:

estimated expected loss payments based upon an appropriate payment pattern developed in accordance with
standard actuarial techniques (unobservable);

ii. a risk-free rate based on U.S. treasury rates as of the valuation date (observable); and

iii. a credit spread based upon the historical option adjusted spread of the Aspen publicly traded corporate debt

instrument (observable).

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 13 - Fair Value Measurements

Level 3 Measurements and Changes in Leveling

Transfers into or out of levels are recorded at their fair values as of the end of the reporting period, consistent with
the date of determination of fair value.

Investments

The following table present a reconciliation of the beginning and ending balances for all investments measured at
fair value on a recurring basis using Level 3 inputs during the years ended December 31, 2022 and 2021:

2022

2021

Privately-held
Equities

Total

Privately-held
Equities

Other
Investments

Total

(in millions of U.S. dollars)

Beginning fair value

347 $

275 $

Purchases

Sales

Total net unrealized gains (losses)

(15)

(43)

(15)

(43)

—

9 $

—

(9)

—

284

(9)

Ending fair value

294 $

347 $

— $

347

Net unrealized gains (losses) related to Level 3 assets in the table above are included in net unrealized gains
(losses) in our consolidated statements of earnings.

There were no transfers to and from Level 2 and Level 3 investments for the years ended December 31, 2022 and
2021.

Valuations Techniques and Inputs

The table below presents the quantitative information related to the fair value measurements for our privately held
equity investments measured at fair value on a recurring and nonrecurring basis using Level 3 inputs:

Valuation Techniques

Fair Value as of December 31, 2022

Unobservable Input

Range (Average) (1)

Qualitative Information about Level 3 Fair Value Measurements

(in millions of U.S. dollars)

Recurring basis:

Guideline company methodology;
Option pricing model

Dividend discount model;
Guideline companies method

Guideline companies method;
Earnings

Non-recurring basis:

Cost as approximation of fair value

P/BV multiple
P/BV (excluding AOCI) multiple
Price/LTM earnings multiple
Expected term

Discount rate
P/BV multiple
Price/2023 earnings
Price/2024 earnings

LTM Enterprise Value/ EBITDA
multiples
LTM EV/Revenue multiples
Multiple on earnings

190

294

1.70-2.3x
1.6-1.7x
13.3-15.4x
1-3 years

15.0% - 16.0%
1.4x - 2.0x
7.5x - 10.4x
6.3x - 6.5x

11.5x - 12.5x
2.5x - 3x
5x

319

25 Cost as approximation of fair value

(1) The average represents the arithmetic average of the inputs and is not weighted by the relative fair value.

As of December 31, 2022, the valuation techniques we used to fair value $190 million privately held equity
investment includes an option pricing model, which allows for consideration of various exit options that exist within
the investment. The unobservable inputs to the option pricing model have been identified and disclosed in the table
above, and we no longer use a distribution waterfall to fair value the investment.

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 13 - Fair Value Measurements

Funds Held by Reinsured Companies - Embedded Derivative

During the second quarter of 2022, we recognized an embedded derivative in relation to the Aspen LPT transaction
to account for the fair value of the full crediting rate we expect to earn on the funds withheld received as premium
consideration.

The following table presents a reconciliation of the beginning and ending balances for the embedded derivative
measured at fair value on a recurring basis using Level 3 inputs during the year ended December 31, 2022:

Beginning fair value

Initial recognition

Total net unrealized gains

Ending fair value

2022

(in millions of U.S. dollars)

—

Net unrealized gains in the table above are included in net unrealized gains (losses) in our consolidated statements
of earnings.

Valuations Techniques and Inputs
The table below presents the quantitative information related to the fair value measurements for the embedded
derivative on our funds held by reinsured companies measured at fair value on a recurring basis using Level 3
inputs:

Qualitative Information about Level 3 Fair Value Measurements

Valuation Techniques

Fair Value as of
December 31, 2022

(in millions of U.S.
dollars)

Unobservable Input

Average

Monte Carlo simulation model;
Discounted cash flow analysis

Volatility rate;
Expected loss payments

4.86%
$1.3 billion

Insurance Contracts - Fair Value Option

The following table presents a reconciliation of the beginning and ending balances for all insurance contracts
measured at fair value on a recurring basis using Level 3 inputs during the years ended December 31, 2022 and
2021:

2022

Reinsurance
balances
recoverable
on paid and
unpaid losses

Liability for
losses and
LAE

2021

Reinsurance
balances
recoverable
on paid and
unpaid losses

Net

Liability for
losses and
LAE

Net

(in millions of U.S. dollars)

Beginning fair value

1,989 $

432 $

1,557 $

2,453 $

521 $

1,932

Incurred losses and LAE:

Reduction in estimates of ultimate
losses

Reduction in unallocated LAE

Change in fair value

Total incurred losses and LAE

Paid losses

Effect of exchange rate movements

(79)

(18)

(247)

(344)

(245)

(114)

(29)

—

(47)

(76)

(65)

(16)

(50)

(18)

(200)

(268)

(180)

(98)

(59)

(18)

(88)

(165)

(274)

(25)

(6)

—

(13)

(19)

(65)

(5)

(53)

(18)

(75)

(146)

(209)

(20)

Ending fair value

1,286 $

275 $

1,011 $

1,989 $

432 $

1,557

Changes in fair value in the table above are included in net incurred losses and LAE in our consolidated statements
of earnings.

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 13 - Fair Value Measurements

The following table presents the components of the net change in fair value for the years ended December 31,
2022, 2021 and 2020:

Table of Contents

Changes in fair value due to changes in:

Average payout

Corporate bond yield

Credit spread for non-performance

Weighted cost of capital

Risk cost of capital

Change in fair value

Valuations Techniques and Inputs

2022

2021

2020

(in millions of U.S. dollars)

40 $

(219)

(21)

—

22 $

(97)

—

(200) $

(75) $

—

(5)

119

Below is a summary of the quantitative information regarding the significant observable and unobservable inputs
used in the internal model to determine fair value on a recurring basis as of December 31, 2022 and 2021:

Valuation
Technique

Unobservable (U) and Observable (O) Inputs

Weighted Average Weighted Average

2022

2021

Internal model

Corporate bond yield (O)

Internal model

Credit spread for non-performance risk (U)

Internal model

Risk cost of capital (U)

Internal model

Weighted average cost of capital (U)

Internal model

Average payout - liability (U)

Internal model

Average payout - reinsurance balances recoverable on paid and unpaid
losses (U)

A Rated

0.65%

5.1%

8.25%

7.89 years

7.71 years

A rated

0.2%

5.1%

8.25%

7.95 years

7.63 years

The fair value of the liability for losses and LAE and reinsurance balances recoverable on paid and unpaid losses
may increase or decrease due to changes in the corporate bond rate, the credit spread for non-performance risk,
the risk cost of capital, the weighted average cost of capital and the estimated payment pattern.

In addition, the estimate of the capital required to support the liabilities is based upon current industry standards for
capital adequacy.

Disclosure of Fair Values for Financial Instruments Carried at Cost

Senior and Subordinated Notes

The following table presents the fair values of our Senior and Subordinated Notes carried at amortized cost:

4.95% Senior Notes due 2029

3.10% Senior Notes due 2031

Total Senior Notes

5.75% Junior Subordinated Notes due 2040

5.50% Junior Subordinated Notes due 2042

Total Subordinated Notes

December 31, 2022

Amortized Cost

Fair Value

(in millions of U.S. dollars)

496 $

495

991 $

345 $

493

838 $

457

365

822

312

401

713

The fair value of our Senior Notes and our Junior Subordinated Notes due 2040 and 2042 was based on observable
market pricing from a third party pricing service.

The Subordinated Notes are classified as Level 2.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 13 - Fair Value Measurements

Insurance Contracts

Disclosure of fair value of amounts relating to insurance contracts is not required, except those for which we elected
the fair value option, as described above.

Remaining Financial Assets and Liabilities

Our remaining financial assets and liabilities were generally carried at cost or amortized cost, which due to their
short-term nature approximates fair value as of December 31, 2022 and 2021.

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 14 - Variable Interest Entities

Table of Contents

14. VARIABLE INTEREST ENTITIES

We have investments in certain limited partnership funds which are deemed to be variable interest entities ("VIEs").
The activities of these VIEs are generally limited to holding investments and our involvement in these entities is
passive in nature. We consolidate all VIEs in which we are considered to be the primary beneficiary.

GCM Fund

In July 2022, we entered into an agreement to become a limited partner of GCM Blue Sails Infrastructure Offshore
Opportunities Fund, L.P. (“GCM Fund”), with an initial commitment of $150 million. At that time, we performed an
assessment and concluded that as a result of being a limited partner and having no substantive kick-out or
participating rights, the GCM Fund is a VIE. We also concluded that we are the primary beneficiary, as our 99.5%
economic interest in the GCM Fund is disproportionately greater than our lack of stated power to direct the activities
of the GCM Fund that will most significantly impact the GCM Fund’s economic performance. As a result, we have
consolidated the results of the GCM Fund. There was no gain or loss recognized on consolidation.

We have elected to recognize the results of the GCM Fund on a one quarter lag due to anticipated delays in
obtaining timely financial information. As of December 31, 2022, $14 million of the initial commitment has been
called. The carrying amounts of the assets and liabilities of the GCM Fund are presented within existing captions on
our consolidated balance sheet as of December 31, 2022. Net investment income, changes in the fair value of
assets and liabilities of the GCM Fund and management fees will be presented within existing captions in the
consolidated statements of earnings. Such amounts are immaterial for the year ended December 31, 2022.

Our exposure to risk of loss is limited to the amount of our investment, in accordance with the limited partnership
agreement. We have not committed to provide any financial support to the general partner of the GCM Fund. In
addition, we have not committed to provide any additional financial support to the GCM Fund in excess of previously
funded capital commitments and all undistributed profits and income.

The assets of Enstar are not available to the creditors of the GCM Fund.

InRe Fund

During 2021, we redeemed an aggregate of $2.7 billion and completed the liquidation of our investment in the InRe
Fund.

On April 1, 2021, we obtained control of the InRe Fund following redemption by the general partner, an affiliate of
Hillhouse Group, of all of its outstanding ownership interests and the termination of its investment management
activities. From that date we had both full ownership of the InRe Fund and the power to direct its activities, which led
to our determination to consolidate the InRe Fund.

Prior to consolidation, our investment in the InRe Fund was recorded at fair value using the NAV as a practical
expedient, with any changes included within net unrealized gains in the consolidated statements of earnings. Thus,
there was no gain or loss upon consolidation.

During the year ended December 31, 2021 we recognized net investment expenses for the InRe Fund of $13 million
and net realized losses of $58 million (as all investments were redeemed and liquidated during the year subsequent
to consolidation).

During the year ended December 31, 2020, we recognized net unrealized gains of $1.2 billion as we accounted for
this investment at NAV, with all changes in NAV (which would have included all income and expenses of the InRe
Fund) within net unrealized gains.

During the year ended December 31, 2021, our consolidated statements of cash flows included net operating cash
flows of $2.1 billion attributed to the InRe Fund driven by net sales of trading securities, partially offset by net
payments to cover securities sold short, and net investing cash flows of $574 million resulting from the initial
consolidation of the InRe Fund's cash and restricted cash balances.

Summarized Financial Information

Prior to consolidating the InRe Fund, total income, expenses and net income (including Enstar’s and Hillhouse’s
combined interests) for the three months ended March 31, 2021 was $311 million, $19 million and $292 million,
respectively. Total income, expenses and net income for the InRe Fund for the year ended December 31, 2020 was
$1.7 billion, $31 million and $1.7 billion, respectively. Enstar recognized $77 million and $1.2 billion of net unrealized

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 14 - Variable Interest Entities

gains from its allocated share of total net income for the three months ended March 31, 2021 and year ended
December 31, 2020.

Nonconsolidated VIEs

The tables below present the fair value of our investments in nonconsolidated VIEs as well as our maximum
exposure to loss associated with these VIEs:

Table of Contents

Fair Value

Unfunded
Commitments

Maximum Exposure
to Loss

(in millions of U.S. dollars)

As of December 31, 2022

Equities

Publicly traded equity investment in common stock

Privately held equity

Total

Other investments

Hedge funds

Fixed income funds

Private equity funds

CLO equity funds

Private credit funds

Real estate funds

Total

Total investments in nonconsolidated VIEs

As of December 31, 2021

Fair Value

Equities

Publicly traded equity investment in common stock

Other investments

Hedge fund

Fixed income funds

Private equity funds

CLO equity funds

Private credit funds

Real estate funds

Total

Total investments in nonconsolidated VIEs

52 $

549 $

277

1,210

203

2,521 $

2,598 $

— $

—

— $

911

—

149

529

1,622 $

549

310

2,121

203

228

732

4,143

4,220

Unfunded
Commitments

Maximum Exposure
to Loss

(in millions of U.S. dollars)

64 $

— $

291 $

45 $

171

697

207

1,449 $

1,513 $

930

166

418

1,626 $

336

207

1,627

238

180

487

3,075

3,139

Enstar Group Limited | 2022 Form 10-K

208

Item 8 | Notes to Consolidated Financial Statements | Note 15 - Premiums Written and Earned

Table of Contents

15. PREMIUMS WRITTEN AND EARNED

The following tables provide a summary of net premiums written and earned for the years ended December 31,
2022, 2021 and 2020:

2022

2021

2020

Premiums
Written

Premiums
Earned

Premiums
Written

Premiums
Earned

Premiums
Written

Premiums
Earned

(in millions of U.S. dollars)

25 $

(13)

12 $

97 $

(31)

66 $

106 $

(44)

62 $

373 $

(128)

245 $

552 $

(119)

433 $

730

(158)

572

Total

Total gross

Total ceded

Total net

Gross premiums written for the years ended December 31, 2022 and 2021 decreased by $81 million and $446
million, respectively, primarily due to our strategic exit from our active underwriting platforms beginning in 2020.

16. GOODWILL AND INTANGIBLE ASSETS

We have goodwill of $63 million as of December 31, 2022 and 2021 that was included within other assets in the
consolidated balance sheets. There were no changes in this balance for each of the three years ended December
31, 2022. We have no other intangible assets in any of the periods presented within these financial statements.

As part of our annual assessment of goodwill, we have considered the net loss attributable to Enstar ordinary
shareholders for the year ended December 31, 2022, which was driven by net unrealized losses, primarily related to
fixed income securities, as a result of rising interest rates and widening credit spreads. While we expect global
financial markets to remain volatile into 2023, we expect that unrealized losses on our fixed maturity assets will be
recouped as these assets get closer to their maturity and the prices pull to par. Therefore, we have concluded that
the net loss attributable to Enstar ordinary shareholders for the year ended December 31, 2022 is not an indicator of
goodwill impairment.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 17 - Debt Obligations and Credit Facilities

17. DEBT OBLIGATIONS AND CREDIT FACILITIES

We utilize debt financing and credit facilities primarily for funding acquisitions and significant new business,
investment activities and, from time to time, for general corporate purposes.

Our debt obligations were as follows:

Facility

Origination

Term

Principal

December 31, 2022

December 31, 2021

(Unamortized
Cost) / Fair
Value
Adjustments

Carrying
Value

(Unamortized
Cost) / Fair
Value
Adjustments

Carrying
Value

(in millions of U.S. dollars)

4.50% Senior Notes due 2022

March 2017

5 years

— $

4.95% Senior Notes due 2029

May 2019

10 years

3.10% Senior Notes due 2031

August 2021

10 years

Total Senior Notes

5.75% Junior Subordinated
Notes due 2040

5.50% Junior Subordinated
Notes due 2042

5.50% Enhanzed Re's
Subordinated Notes due 2031

Total Subordinated Notes

August 2020

20 years

January 2022

20 years

December 2018

12.1 years

EGL Revolving Credit Facility

August 2018

5 years

500

350

500

—

(4)

(5)

(7)

—

496

495

991

345

493

—

838

—

— $

(5)

280

495

1,270

(5)

345

—

421

—

Total debt obligations

1,829

1,691

The table below provides a summary of the total interest expense for the years ended December 31, 2022, 2021
and 2020:

Interest expense on debt obligations

Amortization of debt issuance costs

Gain on extinguishment

Total interest expense

Senior Notes

2022

2021

2020

(in millions of U.S. dollars)

93 $

(6)

89 $

68 $

—

69 $

—

The Senior Notes are effectively subordinated to all of our secured indebtedness to the extent of the value of the
assets securing such indebtedness, and structurally subordinated to all liabilities of our subsidiaries, including
claims of policyholders.

We may repurchase the 2029 Senior Notes and 2031 Senior Notes at any time prior to the date which is three
months and six months, respectively, prior to maturity, subject to the payment of a make-whole premium. After such
respective date, we may repurchase the 2029 Senior Notes and the 2031 Senior Notes at a purchase price equal to
100% of the outstanding principal amount, plus accrued and unpaid interest. In each case, any such repurchases
are also subject to satisfying certain regulatory requirements.

Subordinated Notes

The 2040 Junior Subordinated Notes are unsecured junior subordinated obligations of Enstar Finance LLC (“Enstar
Finance”). The 2040 Junior Subordinated Notes are fully and unconditionally guaranteed by us on an unsecured
and junior subordinated basis. These debt securities of Enstar Finance are effectively subordinated to the
obligations of our other subsidiaries.

The 2040 Junior Subordinated Notes bear interest (i) during the initial five-year period ending August 30, 2025, at a
fixed rate per annum of 5.75% and (ii) during each five-year reset period thereafter beginning September 1, 2025, at

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 17 - Debt Obligations and Credit Facilities

a fixed rate per annum equal to the five-year U.S. treasury rate calculated as of two business days prior to the
beginning of such five-year period plus 5.468%.

Subject to certain threshold regulatory requirements and during certain time periods, Enstar Finance may
repurchase the 2040 Junior Subordinated Notes, in whole or in part, at any time, at a repurchase price equal to at
least 100% of the principal amount, plus accrued and unpaid interest.

Debt Issuance

In January 2022, our wholly-owned subsidiary, Enstar Finance, completed the issuance and sale of a series of
junior subordinated notes due 2042 (the "2042 Junior Subordinated Notes") for an aggregate principal amount of
$500 million. The 2042 Junior Subordinated Notes bear interest (i) during the initial five-year period ending January
14, 2027, at a fixed rate per annum of 5.50% and (ii) during each five-year reset period thereafter beginning January
15, 2027, at a fixed rate per annum equal to the five-year U.S. treasury rate calculated as of two business days prior
to the beginning of such five-year period plus 4.006%.

The 2042 Junior Subordinated Notes are unsecured junior subordinated obligations of Enstar Finance, are fully and
unconditionally guaranteed by us on an unsecured and junior subordinated basis, and are contractually
subordinated in right of payment to the existing and future obligations of our other subsidiaries (other than Enstar
Finance).

The 2042 Junior Subordinated Notes are exclusively the obligations of Enstar Finance and us, to the extent of the
guarantee, and are not guaranteed by any of our other subsidiaries, which are separate and distinct legal entities
and, except for Enstar Finance, have no obligation, contingent or otherwise, to pay holders any amounts due on the
2042 Junior Subordinated Notes or to make any funds available for payment on the 2042 Junior Subordinated
Notes, whether by dividends, loans or other payments.

Generally, if an event of default occurs, the trustee or the holders of at least 25% in aggregate principal amount of
the then outstanding 2042 Junior Subordinated Notes may declare the principal and accrued and unpaid interest on
all of the then outstanding 2042 Junior Subordinated Notes to be due and payable immediately.

Subject to threshold regulatory requirements, Enstar Finance may repurchase the 2042 Junior Subordinated Notes,
in whole or in part, at any time during a par call period, at a repurchase price equal to 100% of the principal amount
of such notes, plus accrued and unpaid interest, and at any time not during a par call period, plus an additional
"make-whole" premium.

We incurred costs of $7 million in issuing the 2042 Junior Subordinated Notes. The net proceeds of the 2042 Junior
Subordinated Notes were partially used to fund the payment at maturity of the outstanding $280 million aggregate
principal amount of our 2022 Senior Notes.

Debt Repayment

In September 2022, we repaid Enhanzed Re's $70 million of Subordinated Notes due 2031 that had been issued to
an affiliate of Allianz. We also recognized a gain on extinguishment of $6 million as a result of accelerating the
amortization of the remaining fair value adjustment, which was included within interest expense in our consolidated
statements of earnings.

Maturities

As of December 31, 2022, there are no outstanding debt obligations that will become due in each of the next five
years. Our debt of $1.9 billion upon maturity becomes due in periods beyond five years from December 31, 2022.

EGL Revolving Credit Facility

As of December 31, 2022, we were permitted to borrow up to an aggregate amount of $600 million under our
unsecured revolving credit agreement. We may request additional commitments under the facility up to an
additional $400 million, which the existing lenders in their discretion or new lenders may provide, in each case
subject to the terms of the agreement. To date, we have not requested any additional commitments under the
facility.

As of December 31, 2022, there was $600 million of available unutilized capacity under the facility. In the fourth
quarter of 2022, we borrowed and fully repaid $55 million of loans under our revolving credit facility.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 17 - Debt Obligations and Credit Facilities

We pay interest on loans borrowed under the facility at a per annum rate comprising a reference rate determined
based on the type of loan we borrow plus a margin based on our long term senior unsecured debt ratings. The
applicable reference rate is adjusted base rate for base rate loans, adjusted daily Sterling Overnight Index Average
("SONIA") for SONIA loans and adjusted LIBOR or adjusted Euribor for Eurocurrency rate loans denominated in
U.S. dollars or Euros, respectively. The applicable margin varies based upon changes to our long term senior
unsecured debt ratings assigned by S&P or Fitch.

We pay interest quarterly for base rate loans and as frequently as monthly for SONIA loans and Eurocurrency rate
loans, depending on the applicable interest period. We also pay a commitment fee based on the average daily
unutilized capacity under the facility. If an event of default occurs, the interest rate may increase and the agent may,
and at the request of the required lenders shall, terminate lender commitments and demand early repayment of any
outstanding loans borrowed under the facility.

Credit and Deposit Facilities

We utilize unsecured and secured letters of credit ("LOCs") and a deposit facility to support certain of our
(re)insurance performance obligations. We also utilize unsecured LOCs to support the regulatory capital
requirements of certain of our subsidiaries.

Our credit and deposit facilities were as follows:

Aggregate Amount Issued /
Requested as Deposits /
Face Amount

Commitment

Additional
Commitments
Available (1)

December 31,
2022

December 31,
2021

$275 million FAL LOC Facility (2)

$90 million FAL Deposit Facility (2)

$365 million LOC Facility

$100 million LOC Facility

$120 million LOC Facility

$800 million Syndicated LOC Facility

$65 million LOC Facility (3)

$100 million Bermuda LOC Facility (3)(4)

$1 million LOC Facility

$100 million Bermuda LOC Facility (4)

275 $

75 $

135 $

(in millions of U.S. dollars)

365

100

120

800

—

100

—

365

100

625

—

100

£32.0 million United Kingdom LOC Facility (5)

32 £

— $

39 $

210

250

100

111

568

100

—

(1) We may request additional commitments under the facility in an aggregate amount not to exceed this amount.
(2) The FAL LOC facility will expire on September 30, 2024, with an option to extend the termination date to September 30, 2025. The FAL Deposit
Facility will expire May 6, 2023. Under the FAL Deposit facility, a third-party lender deposits a requested market valuation amount of eligible
securities into Lloyd’s on behalf of our Lloyd’s corporate member. As of December 31, 2022 and December 31, 2021, our combined FAL
comprised cash and investments of $455 million (including $90 million provided under the FAL Deposit Facility) and $520 million (including $89
million provided under the FAL Deposit Facility), respectively, and unsecured LOCs of $135 million and $210 million, respectively.

(3) The LOC was terminated during the year ended December 31, 2022.
(4) The LOC issued under this facility qualifies as Eligible Capital for one of our Bermuda regulated subsidiaries.
(5) The LOC issued under this facility qualifies as Ancillary Own Funds capital for one of our U.K. regulated subsidiaries.

We also utilize secured operating LOCs. As of December 31, 2022 and 2021, the total balance of such secured
operating LOCs issued and outstanding was $83 million and $85 million, respectively.

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 18 - Noncontrolling Interests

Table of Contents

18. NONCONTROLLING INTERESTS

We have both redeemable noncontrolling interests ("RNCI") and noncontrolling interests ("NCI") on our consolidated
balance sheets. RNCI with redemption features that are not solely within our control is classified within temporary
equity in the consolidated balance sheets and carried at fair value. The change in fair value is recognized through
retained earnings. NCI, which is carried at book value, does not have redemption features and is classified within
equity in the consolidated balance sheets.

Redeemable Noncontrolling Interests

The following is a reconciliation of the beginning and ending carrying amount of the equity attributable to the RNCI
for the years ended December 31, 2022 and 2021:

Balance as of January 1

Distributions paid
Net (losses) earnings attributable to RNCI

Change in unrealized losses on AFS investments attributable to RNCI

Change in currency translation adjustments attributable to RNCI

Change in redemption value of RNCI

Balance as of December 31

2022

2021

(in millions of U.S. dollars)

179 $

—
(5)

(6)

—

365

(202)
16

(1)

168 $

179

The RNCI as of December 31, 2022 and 2021 relates to StarStone International.

Noncontrolling Interests

As of December 31, 2022 and 2021, we had $96 million and $230 million, respectively, of NCI primarily related to
external interests in three of our subsidiaries, including Enhanzed Re. A reconciliation of the beginning and ending
carrying amount of the equity attributable to NCI is included in the consolidated statements of changes in
shareholder's equity.

On December 28, 2022, Enhanzed Re repurchased the entire 24.9% ownership interest Allianz held in Enhanzed
Re for $174 million38. We will reflect the impact of reclassifying the carrying value of the NCI obtained to Enstar
shareholders’ equity in our first quarter 2023 results, as we report the results of Enhanzed Re on a one quarter
reporting lag.

38 Refer to Note 26 for further information.

Enstar Group Limited | 2022 Form 10-K

213

Item 8 | Notes to Consolidated Financial Statements | Note 19 - Shareholders' Equity

Table of Contents

19. SHAREHOLDERS' EQUITY

As of December 31, 2022 and 2021, our authorized share capital was 111,000,000 ordinary shares ("Voting
Ordinary Shares") and non-voting convertible ordinary shares ("Non-Voting Ordinary Shares"), each of par value
$1.00 per share, and 45,000,000 preferred shares of par value $1.00 per share.

Ordinary Shares

The following is a reconciliation of our beginning and ending ordinary shares for the years ended December 31,
2022, 2021 and 2020:

Voting Ordinary
Shares

Non-Voting
Convertible
Ordinary Series C
Shares

Non-Voting
Convertible
Ordinary Series E
Shares

Total Ordinary
Shares

Balance as of January 1, 2020

18,001,823

2,599,672

910,010

21,511,505

Shares issued

Shares repurchased

752,007

(178,280)

—

752,007

(178,280)

Balance as of December 31, 2020

18,575,550

2,599,672

910,010

22,085,232

Shares issued

Shares repurchased
Warrant exercise (1)

59,447

—

59,447

(2,009,135)

(1,496,321)

(505,239)

(4,010,695)

Balance as of December 31, 2021

16,625,862

Shares issued

Shares repurchased

62,056

(697,580)

—

89,590

1,192,941

—

89,590

404,771

18,223,574

—

62,056

(697,580)

Balance as of December 31, 2022

15,990,338

1,192,941

404,771

17,588,050

(1) Warrants to acquire 175,901 Series C Non-Voting Ordinary Shares for an exercise price of $115.00 per share were exercised on a non-cash
basis during the year ended December 31, 2021, which resulted in a total of 89,590 Series C Non-Voting Ordinary Shares being issued in the
year.

Voting Ordinary Shares

Each voting ordinary share entitles the holder thereof to one vote.

Share Repurchase Programs

The following table presents our ordinary shares repurchased under our share repurchase programs for the years
ended December 31, 2022 and 2021:

2022

2021

Ordinary
shares
repurchased

Average price
per ordinary
share

Aggregate
price

Ordinary
shares
repurchased

Average price
per ordinary
share

Aggregate
price

2020 Repurchase Program (1)
2021 Repurchase Program (2)
2022 Repurchase Program (3)

Total share repurchases
under repurchase programs

(in millions of U.S. dollars, except for share data)

— $

227,383 $

470,197 $

257.02

222.74

—

105

93,678 $

236.42 $

167,617 $

241.13

— $

—

697,580 $

233.92 $

163

261,295 $

239.44

—

(1) Our Board of Directors (our “Board”) approved an ordinary share repurchase program in March 2020 (the “2020 Repurchase Program”), not to
exceed $150 million in aggregate. During the year ended December 31, 2020, we repurchased 178,280 ordinary shares at an average price
per ordinary share of $145.87, for an aggregate price of $26 million. The 2020 Repurchase Program was terminated in July 2021.

(2) Our Board approved an ordinary share repurchase program in November 2021 (the “2021 Repurchase Program”), not to exceed $100 million

in aggregate. The 2021 Repurchase Program was fully utilized as of April 2022.

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Item 8 | Notes to Consolidated Financial Statements | Note 19 - Shareholders' Equity

(3) In May 2022, our Board authorized the repurchase of up to $200 million of our ordinary shares (the “2022 Repurchase Program”), which is
effective through May 5, 2023. As of December 31, 2022, the remaining capacity under the 2022 Repurchase Program was $95 million.

In May 2022, we entered into two share repurchase agreements in relation to our 2022 Repurchase Program. The
first was with Trident Public Equity LP, an affiliate of Stone Point, to repurchase 89,790 of our ordinary shares for an
aggregate price of $20 million. The second was with an unaffiliated institutional shareholder, to repurchase 380,407
shares for an aggregate price of $85 million. Both transactions were priced at $222.74 per share, representing a 5%
discount to the closing price of our ordinary shares on the NASDAQ stock market on May 9, 2022.

Strategic Share Repurchases

In July 2021, we repurchased 3,749,400 of our ordinary shares, comprising (a) 1,747,840 of our voting ordinary
shares, (b) 1,496,321 of our Series C non-voting ordinary shares, and (c) 505,239 of our Series E non-voting
ordinary shares, held by funds managed by Hillhouse Group (the “Hillhouse Funds”), a related party, for a price of
$234.52 per share, totaling $879 million in aggregate. The shares represented the Hillhouse Funds' entire interest in
Enstar, which constituted 16.9% of our total ordinary shares and 9.4% of our voting ordinary shares.

Joint Share Ownership Plan

In January 2020, 565,630 voting ordinary shares were issued to the trustee of the Enstar Group Limited Employee
Benefit Trust (the "EB Trust"). Voting rights in respect of shares held in the EB Trust have been contractually
waived. We have consolidated the EB Trust, and shares held in the EB Trust are classified like treasury shares as
contra-equity in our consolidated balance sheet. The EB Trust supports awards made under our Joint Share
Ownership Plan39.

Non-Voting Ordinary Shares

Our non-voting ordinary shares comprised several different series as of December 31, 2022:

The Series C shares:

have all of the economic rights (including dividend rights) attaching to voting ordinary shares but are non-voting
except in certain limited circumstances;

ii. will automatically convert at a one-for-one exchange ratio (subject to adjustment for share splits, dividends,
recapitalizations, consolidations or similar transactions) into voting ordinary shares if the registered holder
transfers them in a widely dispersed offering;

iii. may only vote on certain limited matters that would constitute a variation of class rights and as required under

Bermuda law; and

iv.

require the registered holders’ written consent in order to vary the rights of the shares in a significant and
adverse manner.

The Series D shares are authorized, but no shares in these series are issued and outstanding. Holders of the Series
C shares have the right to convert such shares, on a share-for-share basis, subject to certain adjustments, into
Series D shares at their option. There is no economic difference in Series C or D shares, but there are slight
differences in the conversion rights and the limited voting rights of each series.

The Series E shares have substantially the same rights as the Series C shares, except that:

ii.

they are convertible only into voting ordinary shares; and

they may only vote as required under Bermuda law.

The Series E shares include all other non-voting ordinary shares authorized under our bye-laws but not classified as
Series C or D non-voting ordinary shares.

Preferred Shares

Series C Preferred Shares

As of December 31, 2022, there were 388,571 Series C participating non-voting perpetual preferred shares ("Series
C Preferred Shares") issued and held by one of our wholly-owned subsidiaries.

39 As described in Note 21.

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Item 8 | Notes to Consolidated Financial Statements | Note 19 - Shareholders' Equity

The Series C Preferred Shares:

upon liquidation, dissolution or winding up of the Company, entitle their holders to a preference over holders of
our ordinary voting and non-voting shares of an amount equal to $0.001 per share with respect to surplus
assets; and

ii. are non-voting except in certain limited circumstances.

The Series C Preferred shares have dividend rights equal to those of the ordinary voting shares, subject to certain
limitations and in an amount determined by a "participation rate" that is generally reflective of the reduction in the
number of Series C Preferred Shares issued in exchange for the previously outstanding Series A shares.

The Series C Preferred Shares otherwise rank on parity with the ordinary voting and non-voting shares, and they
rank senior to each other class or series of share capital, unless the terms of any such class or series shall
expressly provide otherwise.

Series D Preferred Shares

In June 2018, the Company raised $400 million of gross proceeds through the public offering of 16,000 shares of its
7.00% non-cumulative fixed-to-floating rate Series D perpetual preferred shares ("Series D Preferred Shares")
(equivalent to 16,000,000 depositary shares, each of which represents a 1/1,000th interest in a Series D Preferred
Share), $1.00 par value and $25,000 liquidation preference per share (equivalent to $25.00 per depositary share).
The depositary shares are listed and trade under the "ESGRP" ticker symbol on the NASDAQ Global Select Market.

The Series D Preferred Shares are not redeemable prior to September 1, 2028, except in specified circumstances
as described in the prospectus supplement relating to the offering. On and after September 1, 2028, the Series D
Preferred Shares, represented by the depositary shares, will be redeemable at the Company’s option, in whole or
from time to time in part, at a redemption price equal to $25,000 per Series D Preferred Share (equivalent to $25.00
per depositary share), plus any declared and unpaid dividends.

Series E Preferred Shares

On November 2018, the Company raised $110 million of gross proceeds through the public offering of 4,400 shares
of its 7.00% fixed rate non-cumulative Series E perpetual preferred shares ("Series E Preferred Shares") (equivalent
to 4,400,000 depositary shares, each of which represents a 1/1,000th interest in a Series E Preferred Share), $1.00
par value and $25,000 liquidation preference per share (equivalent to $25.00 per depositary share). The depositary
shares are listed and trade under the "ESGRO" ticker symbol on the NASDAQ Global Select Market.

The Series E Preferred Shares are not redeemable prior to March 1, 2024, except in specified circumstances as
described in the prospectus supplement relating to the offering. On and after March 1, 2024, the Series E Preferred
Shares, represented by the depositary shares, will be redeemable at the Company’s option, in whole or from time to
time in part, at a redemption price equal to $25,000 per Series E Preferred Share (equivalent to $25.00 per
depositary share), plus any declared and unpaid dividends.

Dividends on Preferred Shares

Holders of Series D and Series E Preferred Shares are entitled to receive, only when, as and if declared, non-
cumulative cash dividends, paid quarterly in arrears on the 1st day of March, June, September and December of
each year, of 7.00% per annum.

Commencing on September 1, 2028, the Series D Preferred Shares will convert to a floating rate basis and
dividends will be payable on a non-cumulative basis, when, as and if declared, at an alternative reference rate (with
spread adjustment) to three-month LIBOR, as determined by the calculation agent consistent with accepted market
practice, plus 4.015% per annum. Dividends that are not declared will not accumulate and will not be payable.

During the years ended December 31, 2022, 2021 and 2020, we declared and paid dividends on Series D Preferred
Shares of $28 million and on Series E Preferred Shares of $8 million for all three years.

Any payment of dividends must be approved by our Board. Our ability to pay dividends is subject to certain
restrictions40.

40 As described in Note 24.

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Item 8 | Notes to Consolidated Financial Statements | Note 19 - Shareholders' Equity

Accumulated Other Comprehensive Income

The following table presents details about the tax effects allocated to each component of other comprehensive
income (loss):

2022

2021

2020

Before
Tax
Amount

Tax
(Expense)
Benefit

Net of
Tax
Amount

Before
Tax
Amount

Tax
(Expense)
Benefit

Net of
Tax
Amount

Before
Tax
Amount

Tax
(Expense)
Benefit

Net of
Tax
Amount

(in millions of U.S. dollars)

Unrealized (losses) gains on fixed
income securities, AFS arising during
the year

Reclassification adjustment for
change in allowance for credit losses
recognized in net earnings

Reclassification adjustment for net
realized (gains) losses included in
net earnings

Reclassification to earnings on
disposal of subsidiary

Change in currency translation
adjustment

Other

Other comprehensive (loss)
income

$ (689) $

8 $ (681) $ (112) $

6 $ (106) $ 116 $

(11) $ 105

—

(2)

—

(2)

(7)

—

(2)

—

(1)

—

(1)

(6)

(20)

—

(15)

(2)

—

(18)

(12)

(2)

$ (580) $

6 $ (574) $ (105) $

7 $

(98) $

79 $

(6) $

The following table presents details amounts reclassified from AOCI:

Details about AOCI components

2022

2021

2020

Affected Line Item in Statement
where Net Earnings are presented

Unrealized (losses) gains on fixed
income securities, AFS

(111) $

(6) $

19 Net unrealized (losses) gains

(in millions of U.S. dollars)

—

(111)

(109)

—

(6)

(1)

(7)

—

Net earnings from discontinued
operations

36 Total before tax

(5) Income tax expense

31 Net of tax

— General and administrative expenses

(107) $

(7) $

31 Net of tax

Other

Total reclassifications for the
period, net of tax

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 20 - Earnings per Share

Table of Contents

20. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net earnings per ordinary share:

Numerator:

Earnings (loss) per share attributable to Enstar ordinary shareholders:

Net (loss) earnings from continuing operations (1)
Net earnings from discontinued operations (2)
Net (loss) earnings attributable to Enstar ordinary shareholders

Denominator:

Weighted-average ordinary shares outstanding — basic (3)
Effect of dilutive securities:
Share-based compensation plans (4)
Warrants (5)
Weighted-average ordinary shares outstanding — diluted (6)

Earnings (loss) per share attributable to Enstar ordinary shareholders:

Basic:

Net (loss) earnings from continuing operations

Net earnings from discontinued operations

Net (loss) earnings per ordinary share

Diluted (6):

Net (loss) earnings from continuing operations

Net earnings from discontinued operations

Net (loss) earnings per ordinary share

2022

2021

2020

(in millions of U.S. dollars, except share data)

(906) $

502 $

1,716

—

(906) $

502 $

1,723

17,207,229

19,821,259

21,551,408

115,901

225,213

—

80,659

208,293

58,593

17,323,130

20,127,131

21,818,294

(52.65) $

25.33 $

—

(52.65) $

25.33 $

(52.65) $

24.94 $

—

(52.65) $

24.94 $

79.60

0.35

79.95

78.62

0.35

78.97

(1) Net earnings from continuing operations attributable to Enstar ordinary shareholders equals net earnings from continuing operations, plus net

(earnings) loss from continuing operations attributable to noncontrolling interest, less dividends on preferred shares.

(2) Net earnings from discontinued operations attributable to Enstar ordinary shareholders equals net earnings from discontinued operations, net

of income taxes, plus net (earnings) from discontinued operations attributable to noncontrolling interest41.

(3) Weighted-average ordinary shares for basic earnings per share includes ordinary shares (voting and non-voting) but excludes ordinary shares

held in the EB Trust in respect of JSOP awards.

(4) Share-based dilutive securities include restricted shares, restricted share units, and performance share units. Certain share-based
compensation awards were excluded from the calculation for the years ended December 31, 2022 and 2021 because they were anti-dilutive.
The ordinary shares held in the EB Trust in respect of the JSOP awards were also excluded because they are treated as held in treasury.

(5) Warrants to acquire 175,901 Series C Non-Voting Ordinary Shares for an exercise price of $115.00 per share were exercised on a non-cash
basis during the year ended December 31, 2021, which resulted in a total of 89,590 Series C Non-Voting Ordinary Shares being issued in the
year. As of December 31, 2021, there were no warrants outstanding following the exercise described. The warrants presented in the table
above are a weighted-average of the warrants outstanding for the year.

(6) During a period of loss, the basic weighted average ordinary shares outstanding is used in the denominator of the diluted loss per ordinary

share computation as the effect of including potentially dilutive securities would be anti-dilutive.

41 Refer to Note 5 for a breakdown.

Enstar Group Limited | 2022 Form 10-K

218

Item 8 | Notes to Consolidated Financial Statements | Note 21 - Share-Based Compensation

Table of Contents

21. SHARE-BASED COMPENSATION

The 2016 Equity Incentive Plan is our primary share-based compensation plan. We also maintain other share-based
compensation plans as discussed below.

The table below provides a summary of the compensation costs for all of our share-based compensation plans for
the years ended December 31, 2022, 2021 and 2020:

Share-based compensation plans:

Restricted shares and restricted share units

Performance share units

Joint share ownership plan expense

Other share-based compensation plans

Total share-based compensation

2022

2021

2020

(in millions of U.S. dollars)

10 $

(8)

—

7 $

10 $

28 $

We recognized negative compensation costs on our performance share units for the year ended December 31,
2022 as a result of reducing the estimated performance multiplier on certain of our previously granted awards.

The associated tax benefit recorded to income tax benefit (expense) in the consolidated statements of earnings was
less than $1 million for the year ended December 31, 2022 and $3 million for each of the years ended December
31, 2021 and 2020.

Shares authorized for issuance as of December 31, 2022 were as follows:

2016 Equity Incentive Plan

Employee Share Repurchase Plan

Restricted Shares and Restricted Share Units

Authorized

1,739,654

200,000

Restricted shares and restricted share units are service awards that typically vest over three years. These awards
are share-settled and are recorded in additional paid-in capital on the consolidated balance sheets. The fair value of
these awards is measured by multiplying the number of shares subject to the award by the closing price of our
ordinary shares on the grant date and expensed over the service period.

The following table summarizes the activity related to restricted shares and restricted share awards during 2022:

Nonvested — January 1

Granted

Vested

Forfeited

Nonvested — December 31

Number of
Shares

Weighted-Average
Share Price

92,658

63,460

(40,764)

(1,220)

114,134

$200.44

245.63

191.18

212.50

228.75

The unrecognized compensation cost related to our unvested restricted share and restricted share unit awards as of
December 31, 2022 was $18 million. This cost is recognizable over the next 1.6 years, which is the weighted
average contractual life.

Performance Share Units ("PSUs")

PSUs are share-settled and vest following the end of the three-year performance period. The fair value of these
awards is measured by multiplying the number of shares subject to the award by the closing price of our ordinary
shares on the grant date and considering any performance related adjustments. The number of shares to vest will
be determined by a performance adjustment based on either:

the change in fully diluted book value per share ("FDBVPS") over three years; or

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 21 - Share-Based Compensation

ii. average annual non-GAAP operating income return on equity, excluding StarStone Group for the 2020 and

2019 grant years only.

Performance Share Units based on FDBVPS

The following table summarizes the awards granted, the vested and unvested PSU awards at December 31, 2022,
and the performance criteria and associated performance multipliers at various levels of achievement.

Inception-to-date Activity Roll-forward

Performance Criteria:
Change in FDBVPS (3 year)

Performance Multiplier
Levels Per Award Agreements

Grant
Year

PSUs
Granted
at Target Forfeited

Estimated
Change in
Multiplier

Vested

Unvested at
December
31, 2022

2019

18,308

(3,543)

6,639

(21,404)

2020

22,591

(8,607)

(12,656)

(1,328)

2020

52,948

—

(52,948)

—

2021

14,429

(2,277)

(11,507)

(645)

2022

15,120

(267)

—

(11)

123,396

(14,694)

(70,472)

(23,388)

—

14,842

Threshold

Target

Target + Maximum Threshold

Target

Target + Maximum

20.0 %

30.0 %

25.0 %

32.5 %

N/A

33.1 %

36.8 %

44.3 %

25.0 %

32.5 %

16.6 %

22.6 %

N/A

40.0 %

52.1 %

40.0 %

28.6 %

60.0 %

100.0 %

60.0 %

100.0 %

N/A

150.0 %

50.0 %

100.0 % 150.0 %

200.0 %

60.0 %

100.0 %

60.0 %

100.0 %

N/A

150.0 %

For each type of PSU based on FDBVPS, a change in the FDBVPS Performance Criteria at each of Threshold,
Target and Maximum will result in the application of the respective Threshold, Target and Maximum Performance
Multiplier and a settlement of awards at that level. In addition, for the 2020 FDBVPS Type II award, a change in the
FDBVPS Performance Criteria at "Target +" will result in the application of the "Target +" Performance Multiplier.
Straight-line interpolation applies within these ranges, and no settlement occurs if the increase in FDBVPS is less
than the Threshold.

Performance Share Units based on Average Annual Non-GAAP Operating Income Return on Equity ("Operating ROE")

The following table summarizes the awards granted, the vested and unvested units at December 31, 2022, and the
performance criteria and associated performance multipliers at various levels of achievement.

Inception-to-date Activity Roll-forward

Performance Criteria:
Average Annual Operating ROE

Performance Multiplier
Levels Per Award Agreements

Grant
Year

PSUs
Granted
at Target Forfeited

Estimated
Change in
Multiplier

Vested

Unvested at
December 31,
2022

Threshold

Target Maximum Threshold

Target

Maximum

2019

18,308

2020

22,560

2021

14,401

2022

15,080

(3,538)

(8,511)

(2,275)

(250)

6,616

(21,386)

6,356

(1,461)

—

(645)

(27)

70,349

(14,574)

12,972

(23,519)

—

9.6 % 12.0 %

18,944

11,481

14,803

45,228

9.6 % 12.0 %

8.0 % 10.5 %

14.4 %

13.0 %

60.0 % 100.0 %

150.0 %

60.0 % 100.0 %

150.0 %

60.0 % 100.0 %

150.0 %

60.0 % 100.0 %

150.0 %

Annual Operating ROE is calculated based upon the non-GAAP operating income return on opening shareholder's
equity, excluding StarStone for the 2020 and 2019 grant years only. Average Annual Operating ROE is the sum of
the three individual year annual operating ROE %'s divided by three. An Average Annual Operating ROE of Target
to Maximum or more results in a settlement of 100.0% to a maximum of 150.0% of the units granted, respectively.
An Average Annual Operating ROE of Threshold to Target results in a settlement of 60.0% to 100.0%. Straight-line
interpolation applies within these ranges and no settlement occurs if the Average Annual Operating ROE is less
than the Threshold.

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Item 8 | Notes to Consolidated Financial Statements | Note 21 - Share-Based Compensation

Performance Multipliers

For expense purposes we assume a Target vesting at the initial time of award. At the end of each reporting period,
we estimate the expected performance multiplier, as shown in the table below:

Table of Contents

Award Description

2019 FDBVPS

2019 Average Operating ROE

2020 FDBVPS Type I (32.5% Target Change)

2020 Average Operating ROE

2020 FDBVPS Type II (36.8% Target Change)

2021 FDBVPS

2021 Average Operating ROE

2022 FDBVPS

2022 Average Operating ROE

(1) Multipliers for the 2019 awards are the final achieved terms.

2022

150.0%

0.0%

150.0%

0.0%

100.0%

2021
150.0% (1)
150.0% (1)
150.0%

150.0%

100.0%

N/A

2020

150.0%

100.0%

N/A

The unrecognized compensation cost related to our unvested PSU share awards as of December 31, 2022 was $7
million. This cost is recognizable over the next 0.8 years, which is the weighted average contractual life.

Roll-forward of Performance Share Units

The following table summarizes the activity related to PSUs during 2022:

Nonvested — January 1

Granted

Change in performance multiplier

Vested

Forfeited

Nonvested — December 31

Joint Share Ownership Plan

Number of
Shares

Weighted-Average
Share Price

183,092

30,200

(110,452)

(40,942)

(1,828)

60,070

$185.97

259.35

196.26

166.46

213.79

216.15

Under the JSOP, we have the ability to make equity awards to our U.K.-based staff through which a recipient
acquires jointly held interests in a set number of our voting ordinary shares together with the independent trustee of
the EB Trust at fair market value, pursuant to the terms of a joint ownership agreement. Voting rights in respect of
shares held in the EB Trust are contractually waived. Shares held in the EB Trust are classified as treasury shares.

In January 2020, a JSOP award comprising 565,630 underlying voting ordinary shares was made to our Chief
Executive Officer (“CEO”) which cliff-vests upon the vesting date. The value of the award at vesting, if any, is
determined based on the price of our voting ordinary shares appreciating above a certain threshold between the
date of grant and the vesting date.

If the higher of the closing price per share on the vesting date and the 10-day volume weighted average price per
share for the ten consecutive trading days ending on the vesting date (each, the "Market Price") is equal to or
greater than the hurdle price, the award will have a value equal to the Market Price, less $205.89, multiplied by
565,630. If the Market Price is less than the hurdle price on such date, the award will have no value. In addition,
20.0% of the award is subject to a performance condition based on growth in FDBVPS over a five year period
starting January 1, 2020.

The accounting for stock-settled JSOP awards is similar to options, whereby the grant date fair value of $14 million
is expensed over the life of the award. To determine the grant date fair value of $24.13 per share, we utilized a
Monte-Carlo valuation model with the following assumptions:

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Item 8 | Notes to Consolidated Financial Statements | Note 21 - Share-Based Compensation

Table of Contents

Weighted-average volatility

Weighted-average risk-free interest rate

Dividend yield

2020

18.7 %

1.6 %

0.0 %

On July 1, 2022, the terms of the JSOP award made to our CEO were amended to extend the vesting date of the
award from January 20, 2023 to January 20, 2025. The amendment preserved the compound annual growth used
to determine the hurdle price that must be achieved in order for the JSOP award to vest, which resulted in an
increase to the hurdle price from $266.00 to $315.53. A corresponding extension was made to the term of the
performance condition based on growth in FDBVPS from December 31, 2022 to December 31, 2024. All other
terms of the award remained the same.

The incremental fair value of the amended award on July 1, 2022 was $15 million, or $27.25 per share, which will
be expensed over the remaining life of the award commencing from July 1, 2022. To determine the incremental fair
value of the amended award, we utilized a Monte-Carlo valuation model with the following assumptions:

Weighted-average volatility

Weighted-average risk-free interest rate

Dividend yield

2022

35.2 %

2.8 %

0.0 %

The total unrecognized compensation cost related to our unvested JSOP share awards as of December 31, 2022
was $13 million. This cost is recognizable over the next 2.1 years, which is the weighted average contractual life.

Other share-based compensation plans

Deferred Compensation and Ordinary Share Plan for Non-Employee Directors

The number of units credited to the accounts of non-employee directors for the years ended December 31, 2022,
2021 and 2020 under the Enstar Group Limited Deferred Compensation and Ordinary Share Plan for Non-
Employee Directors (the "Deferred Compensation Plan") were 6,438, 5,092 and 7,204, respectively.

Employee Share Purchase Plan

We provide an Employee Share Purchase Plan ("ESPP") whereby eligible employees may purchase Enstar shares
at a 15.0% discount to market price, in an amount of share value limited to the lower of $21,250 or 15.0% of the
employee's base salary. The 15.0% discount is expensed as compensation cost. The number of shares issued to
employees under the ESPP for the years ended December 31, 2022, 2021 and 2020 were 9,025, 9,432 and 16,914,
respectively.

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222

Item 8 | Notes to Consolidated Financial Statements | Note 22 - Income Taxation

Table of Contents

22. INCOME TAXATION

Enstar is incorporated under the laws of Bermuda and under Bermuda law is not required to pay taxes in Bermuda
based upon income or capital gains. The Company, under the Exempted Undertakings Tax Protection Act of 1966,
is protected against any legislation that may be enacted in Bermuda which would impose any tax on profits, income,
or gain until March 31, 2035.

We have foreign operating subsidiaries and branch operations principally located in the United States, United
Kingdom, Continental Europe and Australia that are subject to federal, foreign, state and local taxes in those
jurisdictions. The undistributed earnings from our foreign subsidiaries will be indefinitely reinvested in those
jurisdictions where the undistributed earnings were earned.

Deferred tax liabilities have not been accrued with respect to the undistributed earnings of our foreign subsidiaries.
Generally, when earnings are distributed as dividends, withholding taxes may be imposed by the jurisdiction of the
paying subsidiary. For our U.S. subsidiaries, we have not currently accrued any withholding taxes with respect to
unremitted earnings because, solely for U.S. Federal income tax purposes, there are no accumulated positive
earnings and profits that could be subject to U.S. dividend withholding tax. For our United Kingdom subsidiaries,
there are no withholding taxes imposed as a matter of U.K. domestic tax law. For our other foreign subsidiaries, an
insignificant amount of earnings is indefinitely reinvested; however, it would not be practicable to compute the
related amounts of withholding taxes due to a variety of factors, including the amount, timing and manner of any
repatriation. Because we operate in many jurisdictions, our net earnings are subject to risk due to changing tax laws
and tax rates around the world. The current, rapidly changing economic environment may increase the likelihood of
substantial changes to tax laws in the jurisdictions in which we operate.

Income Tax Expense

The following table presents (losses) earnings before income taxes by jurisdiction attributable to continuing
operations, including earnings from equity method investments, for the years ended December 31, 2022, 2021 and
2020:

Domestic (Bermuda)

Foreign

Total (losses) earnings before income taxes and earnings from
equity method investments attributable to continuing operations

2022

2021

2020

(in millions of U.S. dollars)

(710) $

(247)

430 $

150

1,505

234

(957) $

580 $

1,739

The following table presents our current and deferred income tax (benefit) expense attributable to continuing
operations by jurisdiction for the years ended December 31, 2022, 2021 and 2020:

Current:

Domestic (Bermuda)

Foreign

Deferred:

Domestic (Bermuda)
Foreign

2022

2021

2020

(in millions of U.S. dollars)

— $

—

—
(12)

(12)

—
21

Total income tax (benefit) expense attributable to continuing
operations

(12) $

27 $

Enstar Group Limited | 2022 Form 10-K

—

—
9

223

Item 8 | Notes to Consolidated Financial Statements | Note 22 - Income Taxation

The actual effective income tax rate differs from the statutory rate of 0 percent under Bermuda law applied to
earnings attributable to continuing operations before income taxes, including earnings from equity method
investments for the years ended December 31, 2022, 2021 and 2020 as shown in the following reconciliation:

Table of Contents

(Losses) earnings before income taxes

Bermuda income taxes at statutory rate

Foreign income tax rate differential

Change in valuation allowance

Effect of change in foreign income tax rate

Other

Effective income tax rate

2022

2021

2020

(in millions of U.S. dollars)

(957)

580

1,739

0.0 %

4.6 %

(3.9) %

0.1 %

0.5 %

1.3 %

0.0 %

5.4 %

1.6 %

(1.2) %

(1.1) %

4.7 %

0.0 %

1.3 %

0.1 %

0.0 %

1.4 %

Our effective tax rate is generally driven by the geographical distribution of our earnings before income taxes
between our taxable and non-taxable jurisdictions.

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities (included in other assets and other liabilities, respectively, in the consolidated
balance sheets) reflect the tax effect of the differences between the financial statement carrying amount and the
income tax bases of assets and liabilities.

Significant components of the deferred tax assets and deferred tax liabilities as of December 31, 2022 and 2021
were as follows:

Deferred tax assets:

Net operating loss carryforwards

Capital loss carryforwards

Insurance reserves

Provisions for bad debt

Defendant A&E liabilities

Unrealized losses on investments

Lloyd’s underwriting result in future periods

Other deferred tax assets

Deferred tax assets

Valuation allowance

Deferred tax assets, net of valuation allowance

Deferred tax liabilities:

Unrealized gains on investments

Lloyd's underwriting result in future periods

Other deferred tax liabilities:

Fair value and other basis differences

Other deferred tax liabilities

Total other deferred tax liabilities

Deferred tax liabilities

Net deferred tax asset

Enstar Group Limited | 2022 Form 10-K

2022

2021

(in millions of U.S. dollars)

214 $

166

18
391

(181)

210

—

(62)

(7)

(69)

141 $

—

27
311

(129)

182

(17)

(19)

(17)

(6)

(23)

(59)

123

224

Item 8 | Notes to Consolidated Financial Statements | Note 22 - Income Taxation

Table of Contents

Net Deferred Tax Asset (Liability) Balance by Major Jurisdiction

Australia
United States

United Kingdom

Total

Net Deferred Tax Asset

2022

2021

(in millions of U.S. dollars)

4 $

164

(27)

141

151

(29)

123

Net Operating and Capital Loss Carryforwards

As of December 31, 2022, we had net operating loss carryforwards that could be available to offset future taxable
income, as follows:

Tax Jurisdiction

Net Operating Loss Carryforwards:
United States - Net operating loss

United States - Net operating loss

United Kingdom

Luxembourg

Other

Capital Loss Carryforwards:

United States - Capital Loss

Loss
Carryforwards

Tax effect
(in millions of U.S. dollars)

Expiration

493 $

104

290

2023-2042

Indefinitely

2035-2036

Indefinitely

2027

The U.S. and U.K. net operating loss carryforwards are also subject to certain utilization limitations and have been
considered in management's assessment of valuation allowance.

Assessment of Valuation Allowance on Deferred Tax Assets

As of December 31, 2022 and 2021, we had deferred tax asset valuation allowances of $181 million and $129
million, respectively, related to foreign subsidiaries. We recorded a net increase of $52 million in our deferred tax
valuation allowance for the year ended December 31, 2022, primarily driven by an increase in deferred tax assets
related to significant pre-tax unrealized investment losses reported in U.S. and U.K. jurisdictions, which
management does not believe meet the “more likely than not” realization threshold.

The realization of deferred tax assets is dependent on generating sufficient taxable income in future periods in
which the tax benefits are deductible or creditable. The amount of the deferred tax asset considered realizable,
however, could be adjusted in the future if estimates of future taxable income change.

Income taxes are determined and assessed jurisdictionally by legal entity or by filing group. Certain jurisdictions
require or allow combined or consolidated tax filings. We have estimated the future taxable income of our foreign
subsidiaries and provided a valuation allowance in respect of those assets where we do not expect to realize a
benefit. We have considered all available evidence using a “more likely than not” standard in determining the
amount of the valuation allowance. We considered the following evidence:

ii.

net earnings or losses in recent years;

the future sustainability and likelihood of positive net earnings of our subsidiaries;

iii.

the carryforward periods of tax losses including the effect of reversing temporary differences; and

iv.

tax planning strategies.

In making our determination, the assumptions used in determining future taxable income require significant
judgment and any changes in these assumptions could have an impact on earnings.

Enstar Group Limited | 2022 Form 10-K

225

Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 22 - Income Taxation

U.S Tax Law Changes

In August 2022, President Biden signed the Inflation Reduction Act (“IRA” or “Act”) into law. The Act includes climate
and energy provisions, extends the enhanced Affordable Care Act subsidies, increases IRS enforcement funding,
and allows Medicare to negotiate prescription drug prices. The IRA introduces a 15% corporate alternative minimum
tax (CAMT) for corporations whose average annual adjusted financial statement income for any consecutive three-
tax-year period ending after December 31, 2021 and preceding the tax year exceeds $1 billion and a 1% excise tax
on stock repurchases made by publicly traded U.S. corporations. CAMT and the stock buyback tax provisions
became effective on January 1, 2023 and are not expected to have a material impact on our results of operations.

Unrecognized Tax Benefits

During the years ended December 31, 2022, 2021 and 2020, there were no unrecognized tax benefits. There were
no accruals for the payment of interest and penalties related to income taxes as of each of December 31, 2022,
2021 and 2020.

Open Tax Years

Our operating subsidiaries may be subject to examination by various tax authorities and may have different statutes
of limitations expiration dates. Taxing authorities may propose adjustments to our income taxes.

Listed below are the tax years that remain subject to examination by a major tax jurisdiction as of December 31,
2022:

Major Tax Jurisdiction

United States

United Kingdom

Open Tax Years

2019 to 2022

2021

Enstar Group Limited | 2022 Form 10-K

226

Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 23 - Related Party Transactions

23. RELATED PARTY TRANSACTIONS

The following tables summarize our related party balances and transactions. Additional details about the nature of
our relationships and transactions are included further below.

As of December 31, 2022

Stone
Point (1)

Northshore Monument AmTrust

Citco

Core
Specialty

Other

(in millions of U.S. dollars)

Assets

Short-term investments, AFS, at fair value

1 $

11 $

— $

Fixed maturities, trading, at fair value

Fixed maturities, AFS, at fair value

Equities, at fair value

Other investments, at fair value

Equity method investments

Total investments

Cash and cash equivalents

Restricted cash and cash equivalents

Reinsurance balances recoverable on paid and
unpaid losses

Funds held by reinsured company

Other assets

Liabilities

Losses and LAE

Insurance and reinsurance balances payable

Other liabilities

Net assets (liabilities)

Redeemable noncontrolling interest

447

148

467

—

1,148

—

148

—

210

183

—

110

—

190

—

190

—

211

—

334

—

1,918

1,934

—

$ 1,185 $

161 $

39 $

— $

110 $

190 $

60 $

(102) $

1,934

— $

—

(1) As of December 31, 2022, we had unfunded commitments of $145 million to other investments and $13 million to privately held equity

investments managed by Stone Point and its affiliated entities.

Enstar Group Limited | 2022 Form 10-K

227

Item 8 | Notes to Consolidated Financial Statements | Note 23 - Related Party Transactions

Table of Contents

As of December 31, 2021

Stone
Point

AnglePoint
HK (1)

Northshore Monument

AmTrust

Citco

Core
Specialty

Other

(in millions of U.S. dollars)

Assets

Fixed maturities, trading, at fair value

$ 122 $

— $

180 $

— $

— $ — $

— $ —

Fixed maturities, AFS, at fair value

Equities, at fair value

Other investments, at fair value

Equity method investments

332

153

563

—

Total investments

1,170

Cash and cash equivalents

Restricted cash and cash equivalents

Reinsurance balances recoverable on
paid and unpaid losses

Funds held by reinsured company

Other assets

Liabilities

Losses and LAE

Insurance and reinsurance balances
payable

Other liabilities

—

232

226

—

194

—

224

—

224

—

1,278

225

—

225

1,278

—

504

—

Net assets (liabilities)

$ 1,184 $

Redeemable noncontrolling interest

$ 172 $

9 $

— $

37 $

— $

194 $

224 $

56 $

(228) $ 1,278

— $

— $ — $

— $ —

(1) Subsequent to December 31, 2021, AnglePoint HK ceased to be a related party.

Stone Point Northshore Monument

AmTrust

Citco

Core
Specialty

Other

(in millions of U.S. dollars)

2022

Net premiums earned

— $

9 $

— $

2 $

Net investment income

Net realized gains

Net unrealized losses

Other income

Net incurred losses and LAE

Earnings (losses) from equity method
investments

—

(80)

—

(64)

—

(10)

—

(65)

—

(34)

—

(28)

—

(16)

(14)

—

(64)

—

(60)

—

Total net (loss) earnings

(64) $

— $

(65) $

(28) $

5 $

13 $

(60)

Enstar Group Limited | 2022 Form 10-K

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Item 8 | Notes to Consolidated Financial Statements | Note 23 - Related Party Transactions

Table of Contents

Stone
Point

Hillhouse
(1)

AnglePoint
HK (2)

Northshore Monument AmTrust Citco

Enhanzed
Re (3)

Core

Specialty Other

(in millions of U.S. dollars)

2021

Net premiums earned $ — $

— $

58 $

— $

— $ — $

(2) $

8 $ —

Net investment
income (expense)

Net realized gains

Net unrealized gains
(losses)

Other (expense)
income

Net incurred losses
and LAE

Acquisition costs

General and
administrative
expenses

Earnings from equity
method investments

Total net earnings
(loss)

—

104

—

(13)

—

(69)

—

(82)

—

(15)

—

(6) —

—

(4)

—

136

—

(4)

139

—

(1)

(32) —

(6) —

—

(1)

(38) —

—

(6) —

104 $

97 $

(82) $

5 $

14 $

— $

4 $

79 $

55 $ 139

(1) Includes earnings from our direct investment in the InRe Fund, which was managed by AnglePoint Cayman through March 31, 2021, and the
impact of a $100 million deduction from amounts due to affiliates of Hillhouse Group from the InRe Fund, which had the effect of increasing our
NAV in the InRe Fund on February 21, 2021. Hillhouse Group ceased to be a related party on July 22, 2021.

(2) Includes earnings from our direct investment in the InRe Fund, which was managed by AnglePoint HK from April 1, 2021 to October 15, 2021,
and another fund managed by AnglePoint HK. For the year ended December 31, 2021, we incurred management and performance fees of
$16 million in relation to the InRe Fund, which consisted of a $10 million minimum performance fee and operating expense reimbursements of
$6 million. These fees were deducted from the AnglePoint HK funds’ reported net asset values and recorded as net investment expenses in
the consolidated statements of earnings. AnglePoint HK ceased to be a related party subsequent to December 31, 2021.

(3) Following completion of the Step Acquisition and related consolidation, Enhanzed Re ceased to be a related party on September 1, 2021.

Net investment income (expense)

Net unrealized gains (losses)

Other (expense) income

Net incurred losses and LAE

Earnings from equity method investments

Total net earnings (loss)

Change in unrealized losses on AFS
investments

Stone
Point

Hillhouse
(1)

Monument

AmTrust

Citco

(in millions of U.S. dollars)

Enhanzed
Re

Other

2020

—

1,288

—

1,288

—

(11)

—

(4)

—

(4)

(1)

(2)

147

40 $

1,288 $

88 $

(4) $

2 $

139 $

— $

(3) $

—

(1) Includes earnings from our direct investment in the InRe Fund and other funds, which were then managed by AnglePoint Cayman. For the year
ended December 31, 2020, we incurred management and performance fees of $489 million which were deducted from the Hillhouse Funds’
reported net asset values.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 23 - Related Party Transactions

Stone Point
In May 2022, we entered into a share purchase agreement with an affiliate of Stone Point42.

As of December 31, 2022, investment funds managed by Stone Point own 1,546,196 of our voting ordinary shares,
which constitutes 9.7% of our outstanding voting ordinary shares. James D. Carey, a managing director of Stone
Point, is a member of our Board.

As of December 31, 2022, investment funds managed by Stone Point have a 39.3% interest in our subsidiary SSHL
and a 77.3% interest in Northshore43. Additional information relating to our remaining interest in Northshore is set
forth under the heading "Northshore" below. As of December 31, 2022 and December 31, 2021, the RNCI on our
balance sheet relating to these co-investment transactions was $161 million and $172 million, respectively.

We have made various investments in funds and separate accounts managed by Stone Point or affiliates of Stone
Point, and we have also made direct investments in entities affiliated with Stone Point. Where we have made an
investment in a fund, the manager of such fund generally charges certain fees to the fund, which are deducted from
the net asset value.

We also have certain co-investments alongside Stone Point and its affiliates, including our investments in AmTrust
and Northshore, which are described below, and Mitchell TopCo Holdings, the parent company of Mitchell
International ("Mitchell"), and Genex Services in which we have invested $25 million and account for as a privately
held equity investment. Mitchell provides third-party outsourcing managed care services to one of our subsidiaries in
the ordinary course of its business.

Hillhouse Group

In July 2021, we repurchased the Hillhouse Funds’ (as defined below) entire equity interest in Enstar, and as a
result the Hillhouse Group (as defined below) ceased to be a related party44.

We have historically made significant direct investments in funds (the "Hillhouse Funds") managed by Hillhouse
Capital Management, Ltd. and Hillhouse Capital Advisors, Ltd. (together, "Hillhouse Group") and AnglePoint Asset
Management Ltd., an affiliate of Hillhouse Group ("AnglePoint Cayman"). From February 2017 to February 2021, Jie
Liu, a partner of AnglePoint HK (as defined below), served on our Board.

In February 2021, we entered into a Termination and Release Agreement (the "TRA") with the InRe Fund, Hillhouse
Group, AnglePoint Cayman, AnglePoint Asset Management Limited (“AnglePoint HK”), and InRe Fund GP, Ltd.
pursuant to which we agreed to terminate certain relationships with Hillhouse and its affiliates, primarily with respect
to the InRe Fund.

AnglePoint Cayman previously received sub-advisory services with respect to the InRe Fund from its affiliate,
AnglePoint HK, an investment advisory company licensed by the Securities and Futures Commission in Hong Kong.
Pursuant to the TRA, we acquired an option to buy AnglePoint HK, which we also had the right to assign to a third-
party. In April 2021, we entered into a Designation Agreement with Jie Liu (the "Designation Agreement"), pursuant
to which we designated Mr. Liu, an AnglePoint HK partner, as the purchaser of AnglePoint HK, and he acquired the
company from an affiliate of Hillhouse Group on the same day. AnglePoint Cayman simultaneously assigned its
investment management agreement with the InRe Fund to AnglePoint HK, at which point AnglePoint HK became a
related party.

As a result of the terms of the Designation Agreement, the InRe Fund qualified as a VIE and was consolidated
effective April 1, 2021. During the fourth quarter of 2021, we completed the liquidation of our investment in the InRe
Fund45.

On September 1, 2021, we completed the purchase of the Hillhouse Group’s entire 27.7% interest in Enhanzed Re
for a purchase price of $217 million46.

Refer to Note 19 for further details.

42
43 Refer to Note 5 for a description of transactions impacting Stone Point's interests in SSHL and Northshore that occurred during 2021 and

2020.
Refer to Note 19 for transactions involving Hillhouse Group, which included the exercise of warrants in the first quarter of 2021 and our
repurchase of our ordinary shares held by funds managed by Hillhouse Group in the third quarter of 2021.
45
Refer to Note 14 for further details.
46 Refer to Note 4 for further details.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 23 - Related Party Transactions

AnglePoint HK

In October 2021, we terminated our investment management agreement with AnglePoint HK, the InRe Fund and the
general partner of the InRe Fund, and placed the InRe Fund into an orderly liquidation. As of December 31, 2021,
AnglePoint HK ceased to be a related party.

Northshore

Following the completion of the Exchange Transaction47 on January 1, 2021, our equity interest in Northshore, the
holding company that owns Atrium and Arden, was reduced to 13.8% from 54.1%. We have accounted for our
residual equity interest in Northshore as an investment in a privately held equity security at fair value.

Concurrent with the closing of the Exchange Transaction:

•

Arden entered into an LPT retrocession agreement with one of our majority owned subsidiaries, through which
Arden fully reinsured its run-off portfolio with total liabilities of $19 million to our majority owned subsidiary, in
exchange for a retrocession premium consideration of an equal amount.

Arden retained the premium under a funds held arrangement, to secure the payment obligations of our majority
owned subsidiary.

• One of our wholly-owned subsidiaries entered in a TSA to provide certain transitional services to Northshore.

The TSA was terminated in November 2022.

•

SGL No.1 ceased its provision of underwriting capacity on Syndicate 609. We have continued to report SGL No.
1's 25% gross share of the 2020 and prior underwriting years of Syndicate 609 through the year ended
December 31, 2022. In 2023, the 2020 underwriting year will complete an RITC into a successor year, at which
point the existing contractual arrangements will settle.

There is no net retention for Enstar on Atrium's 2020 and prior underwriting years as the business was
contractually transferred to the Atrium entities that were divested in the Exchange Transaction.

Monument Re

As of December 31, 2022, we own 20.0% of the common shares of Monument Re and 24.4% of its preferred
shares, which is reduced to 13.7% on a committed capital basis. As of December 31, 2022, a fund managed by
Stone Point owns 6.7% of Monument Re’s preferred shares, which increases to 11.2% on a committed capital basis.

In November 2022, we closed a transaction with Monument Re to novate our reinsurance closed block of life
annuity policies written by Enhanzed Re48. A portion of the net gain on novation will be subject to deferral to account
for our existing ownership interest in Monument Re. The final impact of the novation will be reflected in our first
quarter 2023 results, as we report the results of Enhanzed Re on a one quarter reporting lag.

We have accounted for our investment in the common and preferred shares of Monument Re as an equity method
investment.

Our losses from Monument Re include an other-than-temporary impairment charge for the year ended December
31, 2022.

AmTrust

As of December 31, 2022 and 2021, we own 8.7% of the equity interest in Evergreen Parent L.P. ("Evergreen") and
Trident Pine Acquisition LP ("Trident Pine") owns 22.6%. Evergreen owns all of the equity interest in AmTrust
Financial Services, Inc. (“AmTrust"). Trident Pine is an entity owned by private equity funds managed by Stone
Point.

We have accounted for our investment in the shares of AmTrust as an investment in a privately held equity security
at fair value.

Citco

As of December 31, 2022 and 2021, we owned 31.9% of the common shares in HH CTCO Holdings Limited, which
in turn owns 15.4% of the convertible preferred shares, amounting to a 6.2% interest in the total equity of Citco III
Limited ("Citco"). As of December 31, 2022 and 2021, Trident owned 3.4% interest in Citco.

47 Refer to Note 5 for further details on the Exchange Transaction.
48

Refer to Note 26 for further information.

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Item 8 | Notes to Consolidated Financial Statements | Note 23 - Related Party Transactions

We have accounted for our indirect investment in the shares of Citco as an equity method investment.

Enhanzed Re

In September 2021 we repurchased the Hillhouse Group’s entire 27.7% interest in Enhanzed Re for a purchase
price of $217 million, assumed its remaining outstanding capital commitment to Enhanzed Re of $40 million, and
increased our equity interests in Enhanzed Re from 47.4% to 75.1%49. Upon closing, we consolidated Enhanzed Re
(previously accounted for as an equity method investment) and as a result, it ceased to be a related party.

Core Specialty

We account for our investment in the common shares of Core Specialty as an equity method investment on a one
quarter lag.

We also have a LPT and ADC reinsurance agreement and an ASA between certain of our subsidiaries and
StarStone U.S. and Core Specialty50. The TSA was terminated in November 2022.

Furthermore, there are existing reinsurance agreements whereby (i) certain of our subsidiaries provide reinsurance
protection to StarStone U.S. and (ii) StarStone U.S. provides reinsurance protection to certain of our subsidiaries.
These arrangements remain in place.

Other

We also have certain other investments, including investments in limited partnerships and partnership-like limited
liability companies, that had we not elected the fair value option would otherwise be accounted for as equity method
investments51. We have disclosed our investments in these entities on an aggregated basis as they are individually
immaterial.

Refer to Note 4 for further information regarding the Step Acquisition of Enhanzed Re.

49
50 As described in Note 5.
51 Refer to Note 6 for further information regarding our other investments, including summarized financial information of our equity method

investees, including those for which the fair value option was elected.

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 24 - Dividend Restrictions and Statutory Financial Information

24. DIVIDEND RESTRICTIONS AND STATUTORY FINANCIAL INFORMATION

Parent Company Dividend Restrictions

There were no significant restrictions on the Parent Company's ability to pay dividends from retained earnings as of
December 31, 2022. Bermuda law permits the payment of dividends if:

i) we are not, or would not be after payment, unable to pay our liabilities as they become due; and

ii) the realizable value of our assets is in excess of our liabilities after taking such payment into account.

We have not historically declared a dividend on our ordinary shares. The issuance of our Series D and E Preferred
Shares have resulted in the declaration of dividends. Holders of Series D and Series E Preferred Shares are entitled
to receive, only when, as and if declared, non-cumulative cash dividends, paid quarterly in arrears on the 1st day of
March, June, September and December of each year of 7.0% per annum52.

The Bermuda Monetary Authority ("BMA") acts as group supervisor to Enstar. On an annual basis, we are required
to file group statutory financial statements, a group statutory financial return, a group capital and solvency return,
audited group financial statements and a Group Solvency Self-Assessment ("GSSA") with the BMA. The GSSA is
designed to document our perspective on the capital resources necessary to achieve our business strategies and
remain solvent, and to provide the BMA with insights on our risk management, governance procedures and
documentation related to this process. We are required to maintain available group statutory capital and surplus in
an amount that is at least equal to the group enhanced capital requirement (“ECR”). The BMA has also established
a group target capital level equal to 120% of the group ECR. We are in compliance with these requirements.

Our ability to pay dividends to our shareholders is dependent upon the ability of our (re)insurance subsidiaries to
distribute capital and pay dividends to us. Our (re)insurance subsidiaries are subject to certain regulatory
restrictions on the distribution of capital and payment of dividends in the jurisdictions in which they operate, as
described below. The restrictions are generally based on net income or levels of capital and surplus as determined
in accordance with the relevant statutory accounting practices. Failure of these subsidiaries to meet their applicable
regulatory requirements could result in restrictions on any distributions of capital or retained earnings or stricter
regulatory oversight of the subsidiaries.

Our ability to pay dividends and make other forms of distributions may also be limited by repayment obligations and
financial covenants in our outstanding loan facility agreements.

Subsidiary Statutory Financial Information and Dividend Restrictions

Our (re)insurance subsidiaries prepare their statutory financial statements in accordance with statutory accounting
practices prescribed or permitted by local regulators. Statutory and local accounting differs from U.S. GAAP,
including in the treatment of investments, acquisition costs and deferred income taxes, amongst other items.

The statutory capital and surplus amounts as of December 31, 2022 and 2021 and statutory net income (loss)
amounts for the years ended December 31, 2022, 2021 and 2020 for our (re)insurance subsidiaries based in
Bermuda, the United Kingdom, the United States, Australia and Continental Europe are summarized in the table
below which includes information relating to acquisitions from the year of acquisition:

Statutory Capital and Surplus

Actual

Statutory Income (Loss)

2022

2021

2020

Required

2022

2021

Bermuda
U.K.
U.S.
Australia
Europe

3,031 $
619
161
10
53

3,338 $
804
151
15
99

2022

2021
(in millions of U.S. dollars)
5,833 $
848
434
35
188

5,819 $
1,247
534
57
182

(710) $
(11)
(58)
(1)
(30)

524 $
163
23
2
(2)

1,851
43
(67)
(2)
(1)

52 Refer to Note 19 for details regarding dividends on preferred shares.

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 24 - Dividend Restrictions and Statutory Financial Information

As of December 31, 2022, the total amount of net assets of our consolidated subsidiaries that were restricted was
$3.9 billion.

Certain material aspects of these laws and regulations as they relate to solvency, dividends and capital and surplus
are summarized below.

Bermuda

Our Bermuda-based (re)insurance subsidiaries are registered under the Insurance Act 1978 of Bermuda and related
regulations, as amended (the "Insurance Act"). The Insurance Act imposes certain solvency and liquidity standards
and auditing and reporting requirements and grants the BMA powers to supervise, investigate, require information
and the production of documents and intervene in the affairs of insurance companies.

The Insurance Act requires that our Bermuda-based (re)insurance subsidiaries maintain certain solvency and
liquidity standards. The minimum liquidity ratio requires that the value of relevant assets not be less than 75% of the
amount of relevant liabilities. The minimum solvency margin, which varies depending on the class of the insurer, is
determined as a percentage of either net reserves for losses and LAE or premiums. Our Bermuda subsidiaries with
commercial insurance licenses are required to maintain a minimum statutory capital and surplus (Enhanced Capital
Requirement or "ECR") at least equal to the greater of a minimum solvency margin or the Bermuda Solvency
Capital Requirement ("BSCR"). The BSCR is calculated based on a standardized risk-based capital model as
provided by the BMA.

Each of our regulated Bermuda subsidiaries would be prohibited from declaring or paying any dividends if it were in
breach of its minimum solvency margin or liquidity ratio or if the declaration or payment of such dividends would
cause it to fail to meet such margin or ratio. In addition, each of our regulated Bermuda subsidiaries is prohibited,
without the prior approval of the BMA, from reducing by 15% or more its total statutory capital, or from reducing by
25% or more its total statutory capital and surplus, as set out in its previous year’s statutory financial statements.
Our Bermuda (re)insurance companies that are in run-off are required to seek BMA approval for any dividends or
distributions.

As of December 31, 2022 and 2021, each of our Bermuda-based (re)insurance subsidiaries exceeded their
respective minimum solvency and liquidity requirements. The Bermuda (re)insurance subsidiaries in aggregate
exceeded minimum solvency requirements by $2.8 billion as of December 31, 2022 (2021: $2.5 billion) and were in
compliance with their liquidity requirements.

United Kingdom

U.K. Insurance Companies (non-Lloyd's)

Our U.K. based insurance subsidiaries are regulated by the U.K. Prudential Regulatory Authority (the "PRA") and
the Financial Conduct Authority (the "FCA", together with the PRA, the "U.K. Regulator").

Our U.K.-based insurance subsidiaries are required to maintain adequate financial resources in accordance with the
requirements of the U.K. Regulator. Insurers must comply with a Solvency Capital Requirement ("SCR"), which is
calculated using either the Solvency II standard formula or a bespoke internal model. Our non-Lloyd's U.K.
companies use the standard formula for determining compliance with the SCR.

The calculation of the minimum capital resources requirements in any particular case depends on, among other
things, the type and amount of insurance business written and claims paid by the insurance company. As of
December 31, 2022 and 2021, all of our U.K. insurance subsidiaries maintained capital in excess of the minimum
capital resources requirements and complied with the relevant U.K. Regulator requirements. Our U.K.-based
insurance subsidiaries, including our Lloyd's Syndicates described below, in aggregate, maintained capital in excess
of the minimum capital resources requirements by $229 million and $443 million as of December 31, 2022 and
2021, respectively.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 24 - Dividend Restrictions and Statutory Financial Information

Lloyd’s

As of December 31, 2022, we participated in the Lloyd’s market through our interests in: (i) Syndicate 2008, a
syndicate that has permission to underwrite RITC business and other run-off or discontinued business type
transactions with other Lloyd’s syndicates; (ii) Syndicate 1301 (2020 and prior underwriting years, which is managed
by Enstar Managing Agency Limited ("EMAL") (EMAL also serves as managing agent for Syndicate 2008); and (iii)
Atrium’s Syndicate 609 (2020 and prior underwriting years), which is managed by Atrium Underwriters Limited, a
Lloyd's managing agent.

We participated on each of the three syndicates through a single, wholly owned Lloyd’s corporate member. On
January 1, 2021, we sold the Atrium business and on March 15, 2021, we sold the right to operate Syndicate
130153.

The underwriting capacity of a member of Lloyd’s is supported by providing FAL54. Business plans, including
maximum underwriting capacity, for Lloyd’s syndicates require annual approval by the Lloyd’s Franchise Board,
which may require changes to any business plan or additional capital to support underwriting plans.

The Lloyd’s market has applied the Solvency II internal model under Lloyd’s supervision, and our Lloyd’s operations
are required to meet Solvency II standards. Lloyd's has the approval of the PRA to use its internal model under the
Solvency II regime.

United States

Our U.S. Run-off (re)insurance subsidiaries are subject to the insurance laws and regulations of the states in which
they are domiciled, licensed and/or eligible to conduct business. These laws restrict the amount of dividends the
subsidiaries can pay to us. The restrictions are generally based on statutory net income and/or certain levels of
statutory surplus as determined in accordance with the relevant statutory accounting requirements of the individual
domiciliary states or states in which any of the (re)insurance subsidiaries are commercially domiciled. Generally,
prior regulatory approval must be obtained before an insurer may make a distribution above a specified level.

The U.S. (re)insurance subsidiaries are also required to maintain minimum levels of solvency and liquidity as
determined by law, and to comply with Risk-Based Capital ("RBC") requirements and licensing rules as specified by
the National Association of Insurance Commissioners ("NAIC"). RBC is used to evaluate the adequacy of capital
and surplus maintained by our U.S. (re)insurance subsidiaries in relation to three major risk areas associated with:
(i) asset risk; (ii) insurance risk and (iii) other risks. For all of our U.S. (re)insurance subsidiaries, with the exception
of one subsidiary which has a permitted accounting practice to treat an adverse development cover reinsurance
agreement as prospective reinsurance, there are no prescribed or permitted statutory accounting practices that
differ significantly from the statutory accounting principles established by NAIC.

As of December 31, 2022, all of our U.S. non-life (re)insurance subsidiaries exceeded their required levels of RBC.
On an aggregate basis, our U.S. non-life (re)insurance subsidiaries exceeded their minimum levels of RBC as of
December 31, 2022 by $273 million (2021: $383 million).

Australia

The Company’s Australian insurance subsidiary is regulated and subject to prudential supervision by the Australian
Prudential Regulation Authority (“APRA”). APRA is the primary regulatory body responsible for regulating
compliance with the Insurance Act 1973. APRA’s prudential standards require that all insurers maintain and meet
prescribed capital adequacy requirements designed to ensure that insurers to meet their insurance obligations
under a wide range of scenarios.

A run-off insurer must obtain APRA’s written consent prior to making any capital releases, including any payment of
dividends, not from current year profits. The Company’s insurance subsidiary must provide APRA a valuation
prepared by its Appointed Actuary that demonstrates that the tangible assets of the insurer, after the proposed
capital reduction, are sufficient to cover its insurance liabilities to a 99.5% probability of sufficiency.

53 These transactions are discussed further in Note 5.
54

As described in Note 6.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 24 - Dividend Restrictions and Statutory Financial Information

Europe

Our Liechtenstein insurance subsidiary (StarStone Insurance SE) is regulated by the Liechtenstein Financial Market
Authority ("FMA") pursuant to the Liechtenstein Insurance Supervisory Act. This subsidiary is obligated to maintain a
minimum solvency margin based on the Solvency II regulations. As of December 31, 2022, this subsidiary exceeded
the Solvency II requirements by $111 million (2021: $57 million). The amount of dividends that this subsidiary is
permitted to distribute is restricted to freely distributable reserves, which consist of retained earnings, the current
year profit and legal reserves. Any dividend exceeding the current year profit requires the FMA’s approval. Solvency
and capital requirements for this subsidiary are based on the Solvency II framework and must continue to be met
following any distribution.

Our Belgian insurance subsidiary files financial statements and returns with the National Bank of Belgium. This
subsidiary was in compliance with its solvency and capital requirements under Solvency II.

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Item 8 | Notes to Consolidated Financial Statements | Note 25 - Commitments and Contingencies

Table of Contents

25. COMMITMENTS AND CONTINGENCIES

Concentration of Credit Risk

We believe that there are no significant concentrations of credit risk associated with our cash and cash equivalents,
fixed maturity investments, or other investments. Our cash and investments are managed pursuant to guidelines
that follow prudent standards of diversification and liquidity, and limit the allowable holdings of a single issue and
issuers. We are also subject to custodial credit risk on our investments, which we manage by diversifying our
holdings amongst large financial institutions that are highly regulated.

We have exposure to credit risk on certain of our assets pledged to ceding companies under insurance contracts. In
addition, we are potentially exposed should any insurance intermediaries be unable to fulfill their contractual
obligations with respect to payments of balances owed to and by us.

Credit risk exists in relation to (re)insurance balances recoverable on paid and unpaid losses. We remain liable to
the extent that counterparties do not meet their contractual obligations and, therefore, we evaluate and monitor
concentration of credit risk among our (re)insurers.

We are also subject to credit risk in relation to funds held by reinsured companies. Under funds held arrangements,
the reinsured company has retained funds that would otherwise have been remitted to our reinsurance subsidiaries.
The funds are not typically placed into trust or subject to other security arrangements. However, we generally have
the contractual ability to offset any shortfall in the payment of the funds held balances with amounts owed by us.

As of December 31, 2022, we had funds held concentrations to reinsured companies exceeding 10% of
shareholders’ equity of $5.0 billion (December 31, 2021: $4.4 billion) in aggregate.

We limit the amount of credit exposure to any one counterparty and none of our counterparty credit exposures,
excluding U.S. government instruments and the reinsurance counterparties noted above, exceeded 10% of
shareholders’ equity as of December 31, 2022. As of December 31, 2022 our credit exposure to the U.S.
government was $945 million (December 31, 2021: $1.2 billion).

Legal Proceedings

We are, from time to time, involved in various legal proceedings in the ordinary course of business, including
litigation and arbitration regarding claims. Estimated losses relating to claims arising in the ordinary course of
business, including the anticipated outcome of any pending arbitration or litigation, are included in the liability for
losses and LAE in our consolidated balance sheets. In addition to claims litigation, we may be subject to other
lawsuits and regulatory actions in the normal course of business, which may involve, among other things,
allegations of underwriting errors or omissions, employment claims or regulatory activity. We do not believe that the
resolution of any currently pending legal proceedings, either individually or taken as a whole, will have a material
effect on our business, results of operations or financial condition. We anticipate that, similar to the rest of the
(re)insurance industry, we will continue to be subject to litigation and arbitration proceedings in the ordinary course
of business, including litigation generally related to the scope of coverage with respect to A&E and other claims.
Unfunded Investment Commitments

As of December 31, 2022, we had unfunded commitments of $1.8 billion to other investments and $18 million to
privately held equity.

Guarantees

As of December 31, 2022 and 2021, parental guarantees supporting reinsurance obligations, defendant A&E
liabilities, subsidiary capital support arrangements and credit facilities were $2.4 billion and $2.7 billion respectively.
We also guarantee the 2040 and 2042 Junior Subordinated Notes, which have an aggregate principal amount of
$850 million55 as of December 31, 2022 (December 31, 2021: $350 million).

55 As described in Note 17.

Enstar Group Limited | 2022 Form 10-K

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Table of Contents

Item 8 | Notes to Consolidated Financial Statements | Note 25 - Commitments and Contingencies

Redeemable Noncontrolling Interest

We have the right to purchase the RNCI interests from the RNCI holders after March 31, 2023 (each such right, a
"call right") and the RNCI holders have the right to sell their RNCI interests to us after December 31, 2022 (each
such right, a "put right"). Following the closing of the Exchange Transaction, we have maintained a call right over
the portion of SSHL owned by the Trident V Funds and the Dowling Funds, and they will maintain put rights to
transfer those interests to us.

Enstar Group Limited | 2022 Form 10-K

238

Item 8 | Notes to Consolidated Financial Statements | Note 26 - Subsequent Events

Table of Contents

26. SUBSEQUENT EVENTS

Transactions

Enhanzed Re

In November 2022, Enhanzed Re completed a novation of the reinsurance closed block of life annuity policies to
Monument Re Limited (“Monument Re”). We settled the life liabilities and the related assets at carrying value in
return for cash consideration as of the closing date. In addition, effective January 1, 2023, we will adopt the LDTI
standard, which will result in changes to the liability for future policyholder benefits as a result of the unlocking of
discount rate assumptions. We have determined that the impact of adopting this standard will be a reduction in
future policy holder benefits and an increase to a separate component of AOCI as of January 1, 2023 of between
$340 and $380 million.

As at September 30, 2022, the carrying value of the life liabilities and related assets was $1.2 billion and $1.0 billion,
respectively, which we would record as other income of $328 million, if measured as of this date. This amount
consists of both the gain or loss on the novation transaction and the reclassification of the component of AOCI to
earnings.

• Our net earnings attributable to Enstar will be reduced by the amount attributable to Allianz’s 24.9%
noncontrolling interest in Enhanzed Re at the time of the transaction and a portion of our other income recorded
will be subject to deferral over the expected settlement period for the life annuity policies to account for our pre-
existing 20% ownership interest in Monument Re, resulting in an expected overall increase in our first quarter
2023 net earnings of $197 million from the novation.

•

Activity for the period from October 1, 2022 to November 7, 2022 will impact the amount of other income and
net earnings recorded.

On December 28, 2022, Enhanzed Re repurchased the entire 24.9% ownership interest Allianz held in Enhanzed
Re for $174 million. The purchase price will be subject to a post-closing adjustment based on the final net book
value of Enhanzed Re as of December 31, 2022. Following the completion of this transaction, Enhanzed Re
became a wholly-owned subsidiary of Enstar.

The final impact of the novation and the share repurchase will be reflected in our first quarter 2023 results, as we
report the results of Enhanzed Re on a one quarter reporting lag.

QBE LPT

On February 16, 2023, certain of our wholly-owned subsidiaries entered into an LPT agreement with certain
subsidiaries of QBE Insurance Group Limited (“QBE”) relating to a diversified portfolio of business, covering
International and North America financial lines, European and North American reinsurance portfolios and several US
discontinued programs. The transaction is effective as of January 1, 2023.

The LPT agreement covers ground up net loss reserves of $1.9 billion and provides an additional $900 million of
cover on business underwritten between 2010 and 2018. Upon completion, a portion of the portfolio currently
underwritten via QBE’s Lloyd’s Syndicates 386 and 2999 will be transferred to Enstar’s Syndicate 2008. The closing
of the transaction is subject to regulatory approval and other closing conditions.

RACQ

The reinsurance agreement is effect as of July 1, 2022. RACQ will cede net reserves of AUD $360 million (USD
$245 million), and our subsidiary will provide AUD $200 million (USD $136 million) of additional cover in excess of
the ceded reserves. The closing of the transaction is subject to regulatory approval and other closing conditions.

Enstar Group Limited | 2022 Form 10-K

239

Item 8 | Notes to Consolidated Financial Statements | Note 26 - Subsequent Events

Table of Contents

Shareholders’ Equity

On February 23, 2023, our Board authorized the repurchase of up to an additional $105 million of our ordinary
shares under the 2022 Repurchase Program and extended the authorization effective date of the 2022 Repurchase
Program through February 23, 2024. Following this increase, the total remaining capacity under the 2022
Repurchase Program is now $200 million.

Enstar Group Limited | 2022 Form 10-K

240

Item 8 | Notes to Consolidated Financial Statements | Note 27 - Unaudited Condensed Quarterly Financial Data

27. UNAUDITED CONDENSED QUARTERLY FINANCIAL DATA

The information presented below has been adjusted to reflect the impact of changing our accounting policy for the
treatment of DCA amortization. Refer to Note 9 for additional information.

Table of Contents

INCOME

Net premiums earned

Net investment income

Net realized gains (losses)

Net unrealized gains (losses)

Other (losses) income

Net gain on sale of subsidiaries

Total income

EXPENSES

Net incurred losses and loss adjustment
expenses

Current period

Prior period

Total net incurred losses and loss adjustment
expenses

Life and annuity policy benefits

Amortization of net deferred charge assets

Acquisition costs

General and administrative expenses

Interest expense

Net foreign exchange losses (gains)

Total expenses

EARNINGS (LOSS) BEFORE INCOME TAXES

Income tax benefit (expense)

Earnings (losses) from equity method
investments

December 31,

September 30,

June 30,

March 31,

2022

2021

2022

2021

2022

2021

2022

2021

14 $

41 $

4 $

52 $

14 $

59 $

34 $

153

116

(24)

(62)

(36)

106

(38)

(37)

—

(546)

(280)

(591)

400

(381)

(4)

—

(11)

(10)

184

154

(466)

(71)

(486)

547

(290)

159

(280)

(159)

(141)

(93)

(159)

(33)

(176)

(118)

(271)

(133)

(128)

(51)

(146)

(163)

(64)

—

(121)

305

(3)

153

—

(17)

(28)

(2)

(13)

(14)

(438)

(157)

(472)

(14)

(8)

(10)

(86)

(8)

(20)

(14)

—

(10)

137

410

(9)

(3)

(12)

(278)

—

118

205

NET EARNINGS (LOSS)

235

131

(466)

(181)

(467)

398

(247)

Net (earnings) loss attributable to noncontrolling
interest

NET EARNINGS (LOSS) ATTRIBUTABLE TO
ENSTAR

Dividends on preferred shares

NET EARNINGS (LOSS) ATTRIBUTABLE TO
ENSTAR ORDINARY SHAREHOLDERS

Earnings (loss) per ordinary share attributable to
Enstar ordinary shareholders:

(2)

(3)

(11)

236

129

(423)

(180)

(425)

395

(258)

194

(9)

227 $

120 $

(432) $

(189) $

(434) $

386 $

(267) $

185

Basic

Diluted(1)

$ 13.34 $

6.74 $ (25.45) $ (10.30) $ (25.14) $ 17.84 $ (15.25) $

8.58

$ 13.26 $

6.66 $ (25.45) $ (10.30) $ (25.14) $ 17.68 $ (15.25) $

8.47

(1) During a period of loss, the basic weighted average ordinary shares outstanding is used in the denominator of the diluted loss per ordinary

share computation as the effect of including potentially dilutive securities would be anti-dilutive.

Enstar Group Limited | 2022 Form 10-K

241

Table of Contents

Item 8 | Schedules

SCHEDULE I
ENSTAR GROUP LIMITED
SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES56
As of December 31, 2022
(Expressed in millions of U.S. Dollars)

Type of investment

Cost (1)

Fair Value

Short-term and fixed maturity investments — Trading and short-term and
fixed maturity investments within funds held - directly managed:(2)

Amount at which
shown in the
balance sheet

U.S. government and agency

246 $

206 $

U.K. government

Other government

Corporate

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

Structured Products

Total

Short-term and fixed maturity investments — AFS:(2)

U.S. government and agency

U.K. government

Other government

Corporate

Municipal

Residential mortgage-backed

Commercial mortgage-backed

Asset-backed

Total
Equities(3)
Other investments, at fair value (4)

Total

449

2,770

130

206

426

235

1,017

5,539

338

146

3,466

120

407

689

684

5,886

930

2,841

331

2,273

112

190

394

221

586

4,359

310

131

3,013

362

628

660

5,239

875

2,841

15,196 $

13,314 $

206

331

2,273

112

190

394

221

586

4,359

310

131

3,013

362

628

660

5,239

875

2,841

13,314

(1) Original cost of fixed maturity securities is reduced by repayments and adjusted for amortization of premiums or accretion of discounts.
(2) The difference in the amount of fixed maturities shown at fair value and the fixed maturities shown in our consolidated balance sheet relates to

the fair value of $33 million as of December 31, 2022 for our investment in fixed maturities issued by affiliates of Stone Point.

(3) The difference in the amount of equities shown at fair value and the equities shown in our consolidated balance sheet relates to the fair value
of $74 million as of December 31, 2022 for our investment in a registered investment company affiliated with entities owned by Trident, $64
million as a co-investor alongside Stone Point, a $37 million investment in Northshore and a $190 million investment in AmTrust.

(4) The difference in the amount of other investments shown at fair value and the other investments shown in our consolidated balance sheet
relates to the fair value of $0.5 billion as of December 31, 2022 for our other investments in funds or companies owned by or affiliated with
certain related parties.

56 Refer to Note 23 in our consolidated financial statements.

Enstar Group Limited | 2022 Form 10-K

242

SCHEDULE II
ENSTAR GROUP LIMITED
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Balance Sheets - Parent Company Only
As of December 31, 2022 and 2021

Table of Contents

Item 8 | Schedules

2022

2021

(in millions of U.S.
dollars, except share data)

ASSETS

Equities, at fair value (cost: 2022 - $273; 2021 - $2)

286 $

Cash and cash equivalents

Balances due from subsidiaries

Investments in subsidiaries

Other assets

TOTAL ASSETS

LIABILITIES

Debt obligations

Balances due to subsidiaries

Other liabilities

TOTAL LIABILITIES

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY

Ordinary shares (par value $1 each, issued and outstanding 2022: 17,588,050; 2021: 18,223,574):

Voting Ordinary Shares (issued and outstanding 2022: 15,990,338; 2021: 16,625,862)

Non-voting convertible ordinary Series C Shares (issued and outstanding 2022: 1,192,941 and
2021: 1,192,941)

Non-voting convertible ordinary Series E Shares (issued and outstanding 2022: 404,771 and
2021: 404,771)

Preferred Shares:

Series C Preferred Shares (issued and held in treasury 2022 and 2021: 388,571)

Series D Preferred Shares (issued and outstanding 2022 and 2021: 16,000; liquidation
preference $400)

Series E Preferred Shares (issued and outstanding 2022 and 2021: 4,400; liquidation preference
$110)

Treasury shares, at cost (Series C Preferred Shares 2022 and 2021: 388,571)
Joint Share Ownership Plan (voting ordinary shares, held in trust 2022 and 2021: 565,630)

Additional paid-in capital

Accumulated other comprehensive income

Retained earnings

Total Enstar Group Limited Shareholders’ Equity

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

193
6,003

6,505 $

29
7,904

8,012

991 $

1,270

788

1,804

—

400

110

(422)

(1)

766

(575)

4,406

4,701

6,505 $

381

1,689

—

400

110

(422)

(1)

922

(16)

5,312

6,323

8,012

See accompanying notes to the Condensed Financial Information of Registrant

Enstar Group Limited | 2022 Form 10-K

243

Table of Contents

Item 8 | Schedules

SCHEDULE II
ENSTAR GROUP LIMITED
CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CONTINUED
Statements of Earnings - Parent Company Only
For the Years Ended December 31, 2022, 2021 and 2020

2022

2021
(in millions of U.S. dollars)

2020

INCOME

Net investment income

Net unrealized gains

EXPENSES

General and administrative expenses

Interest expense

Net foreign exchange losses (gains)

NET LOSS BEFORE EQUITY IN UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES
Equity in undistributed (losses) earnings of subsidiaries - continuing
operations
Equity in undistributed earnings of subsidiaries - discontinued operations

NET (LOSS) EARNINGS

Dividends on preferred shares

2 $

— $

—

(3)

(82)

(98)

(93)

(788)

—

(870)

(36)

636

—

538

1,836

1,759

(36)

NET (LOSS) EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED
ORDINARY SHAREHOLDERS

(906) $

502 $

1,723

See accompanying notes to the Condensed Financial Information of Registrant

Statements of Comprehensive Income - Parent Company Only
For the Years Ended December 31, 2022, 2021 and 2020

2022

2021
(in millions of U.S. dollars)

2020

NET (LOSS) EARNINGS

(870) $

538 $

1,759

Other comprehensive (loss) income relating to subsidiaries, net of
tax
COMPREHENSIVE (LOSS) INCOME

(559)

(1,429) $

(98)

440 $

1,832

See accompanying notes to the Condensed Financial Information of Registrant

Enstar Group Limited | 2022 Form 10-K

244

Table of Contents

Item 8 | Schedules

SCHEDULE II
ENSTAR GROUP LIMITED
CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CONTINUED
Statements of Cash Flows - Parent Company Only
For the Years Ended December 31, 2022, 2021 and 2020

OPERATING ACTIVITIES:

Net cash flows provided by (used in) operating activities

87 $

(72) $

117

2022

2021

2020

(in millions of U.S. dollars)

INVESTING ACTIVITIES:

Dividends and return of capital from subsidiaries

Contributions to subsidiaries

Net cash flows (used in) provided by investing activities

FINANCING ACTIVITIES:

Dividends on preferred shares

Repurchase of shares

Repayment of loans

Receipt of loans

Net cash flows used in financing activities

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

(102)

(88)

(36)

(163)

(302)

445

(56)

(57)

675

—

675

(36)

(942)

(429)

868

(539)

CASH AND CASH EQUIVALENTS, END OF YEAR

15 $

72 $

(26)

(36)

(26)

(449)

379

(132)

See accompanying notes to the Condensed Financial Information of Registrant

Notes to the Condensed Financial Information of Registrant

The Condensed Financial Information of Registrant should be read in conjunction with our consolidated financial
statements and the accompanying notes thereto included in Part II - Item 8 of this Annual Report on Form 10-K. Our
wholly-owned and majority owned subsidiaries are recorded based upon our proportionate share of our subsidiaries'
net assets (similar to presenting them on the equity method).

Net investment income relates to interest on loans to subsidiaries. For the years ended December 31, 2022, 2021,
and 2020, interest paid was $47 million, $41 million, and $47 million, respectively.

Investing activities in the Condensed Statements of Cash Flows primarily represents the flow of funds to and from
subsidiaries to provide cash on hand to fund business acquisitions and significant new business.

Non-Cash investing activities during the years ended December 31, 2022, 2021, and 2020, included:

$600 million, $0 and $130 million, respectively, for dividends and return of capital from subsidiaries. In 2022,
these transactions represent an intercompany transfer of equities at book value and an increase in balances
due from subsidiaries resulting in a decrease in investments in subsidiaries. In 2020, these transactions were to
settle intercompany balances, resulting in a net reduction in balances due to subsidiaries and a decrease in
investments in subsidiaries.

As of December 31, 2022 and 2021, parental guarantees supporting reinsurance obligations, defendant A&E
liabilities, subsidiary capital support arrangements and credit facilities were $2.4 billion and $2.7 billion. In addition,
as of December 31, 2022 and 2021, there were $135 million and $210 million, respectively, of unsecured letters of
credit for FAL which have a parental guarantee. Furthermore, as of December 31, 2022, we also guarantee the
Junior Subordinated Notes issued in 2020 and 2022 for an aggregate principal amount of $850 million (December
31, 2021 $350 million).

As of December 31, 2022 and 2021, retained earnings were $4.4 billion and $5.3 billion, respectively, a decrease of
$906 million. This decrease was primarily attributable to the net loss of $906 million.

Enstar Group Limited | 2022 Form 10-K

245

SCHEDULE III
ENSTAR GROUP LIMITED
SUPPLEMENTARY INSURANCE INFORMATION
(Expressed in millions of U.S. Dollars)

As of December 31,

Deferred
Acquisition
Costs

Reserves
for Losses
and Loss
Adjustment
Expenses

Policy
Benefits for
Life and
Annuity
Contracts

Unearned
Premiums

Net
Premiums
Earned

Net
Investment
Income

Year ended December 31,

Losses and
Loss
Expenses
and Policy
Benefits

Amortization
of Deferred
Acquisition
Costs

Other
Operating
Expenses

Net
Premiums
Written

Table of Contents

Item 8 | Schedules

2022

Run-off

Assumed Life

Investments

Legacy
Underwriting

Corporate &
Other

Total

2021
Run-off (1)
Assumed Life

Investments

Legacy
Underwriting (1)
Corporate &
Other

Total

2020

Run-off

Investments

Legacy
Underwriting

Corporate &
Other

Total

7 $

13,337 $

114 $

— $

40 $

— $

—

173

(503)

—

1,184

—

445

—

7 $

13,007 $

114 $

1,184 $

66 $

455 $

14 $

13,117 $

171 $

— $

182 $

— $

—

181

—

215

(255)

—

1,502

—

309

—

16 $

13,258 $

188 $

1,502 $

245 $

312 $

(442) $

(30)

—

(218)

(683) $

(194) $

(2)

—

(58)

(234) $

22 $

143 $

—

23 $

142

331 $

44 $

188 $

—

57 $

131

367 $

23 $

9,433 $

72 $

— $

59 $

— $

(145) $

20 $

173 $

—

1,358

(198)

—

203

—

513

—

270

—

371

147

—

151

—

158

136

44 $

10,593 $

275 $

— $

572 $

303 $

373 $

171 $

502 $

(4)

—

430

—

433

(1) As of December 31, 2020, the assets and liabilities of Northshore, the holding company which owns Atrium and Arden (a Run-off subsidiary), were classified as held-for-sale. Deferred

acquisition costs, reserves for losses and LAE and unearned premiums for Northshore were $24 million, $254 million and $91 million, respectively57.

57 Refer to Note 5 in our consolidated financial statements for further information.

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Item 8 | Schedules

SCHEDULE IV
ENSTAR GROUP LIMITED
REINSURANCE
For the Years Ended December 31, 2022, 2021 and 2020
(Expressed in millions of U.S. Dollars)

Gross

Ceded to
Other
Companies

Assumed from
Other
Companies

Net Amount

Percentage of
Amount
Assumed to
Net

2022
Premiums earned:

Property and casualty

Future policyholder
benefits

Total premiums earned

62 $

—

62 $

2021

Premiums earned:

Property and casualty

Future policyholder
benefits

295

—

Total premiums earned

295 $

2020

Premiums earned:

(31) $

—

(31) $

(128)

—

(128) $

18 $

35 $

78 $

242

245

36.7 %

100.0 %

31.0 %

100.0 %

Property and casualty

Total premiums earned

542

542 $

(158)

(158) $

188

188 $

572

32.9 %

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Item 8 | Schedules

SCHEDULE V
ENSTAR GROUP LIMITED
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 2022, 2021 and 2020
(Expressed in millions of U.S. Dollars)

Balance at
Beginning of
Year

Charged to
costs and
expenses

Charged to
other accounts
(1)

Deductions (2)

Balance at
End of Year

December 31, 2022

Reinsurance balances recoverable on paid and
unpaid losses:

Allowance for estimated uncollectible reinsurance $

136 $

— $

(5) $

— $

131

Insurance balances recoverable:

Allowance for estimated uncollectible insurance

Valuation allowance for deferred tax assets

December 31, 2021

Reinsurance balances recoverable on paid and
unpaid losses:

129

—

181

Allowance for estimated uncollectible reinsurance $

137 $

— $

1 $

(2) $

136

Insurance balances recoverable:

Allowance for estimated uncollectible insurance

Valuation allowance for deferred tax assets

December 31, 2020

Reinsurance balances recoverable on paid and
unpaid losses:

118

—

(1)

129

Allowance for estimated uncollectible reinsurance $

148 $

— $

(11) $

137

Insurance balances recoverable:

Allowance for estimated uncollectible insurance

Valuation allowance for deferred tax assets

117

—

(3)

118

(1)

(2)

The 2020 amount includes $3 million for the cumulative effect of change in accounting principle.

Credited to the related asset account.

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Item 8 | Schedules

SCHEDULE VI
ENSTAR GROUP LIMITED
SUPPLEMENTARY INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS
As of and for the years ended December 31, 2022, 2021 and 2020
(Expressed in millions of U.S. Dollars)

As of December 31,2022

Year ended December 31, 2021

Reserves for
Unpaid
Losses and
Loss
Adjustment
Expenses

Deferred
Acquisition
Costs

Unearned
Premiums

Net
Premiums
Earned

Net
Investment
Income

Net Losses and Loss
Expenses Incurred

Current
Period

Prior Periods

Net Paid
Losses and
Loss
Expenses

Amortization
of Deferred
Acquisition
Costs

Net Premiums
Written

7 $

13,007 $

114 $

49 $

455 $

48 $

(756) $

(1,680) $

23 $

13,258

10,593

188

275

242

572

312

303

172

405

(403)

(32)

(1,431)

(1,485)

171

—

433

Affiliation with Registrant

Consolidated Subsidiaries

2022

2021

2020

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of management, including our Chief Executive Officer and our Chief
Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2022. Based on that evaluation, our Chief
Executive Officer and our Chief Financial Officer have concluded that we maintained effective disclosure controls
and procedures to provide reasonable assurance that information required to be disclosed by us in reports that we
file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods
specified in the SEC's rules and forms, and that such information is accumulated and communicated to our
management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with U.S. GAAP.

Under the supervision and with the participation of management, including our Chief Executive Officer and our Chief
Financial Officer, we evaluated the effectiveness of our internal control over financial reporting as of December 31,
2022, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in
Internal Control - Integrated Framework (2013). Based on that evaluation, our management has concluded that our
internal control over financial reporting was effective as of December 31, 2022.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report
which appears herein.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended
December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

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ITEM 9B. OTHER INFORMATION

Not applicable.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT
PREVENT INSPECTIONS

Not applicable.
PART III

ITEM 10.
GOVERNANCE

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE

All information required by Items 10, 11, 12, 13 and 14 of this Annual Report on Form 10-K is incorporated by
reference from the definitive proxy statement for our 2023 Annual General Meeting of Shareholders that will be filed
with the SEC not later than 120 days after the close of the fiscal year ended December 31, 2022 pursuant to
Regulation 14A.

ITEM 11. EXECUTIVE COMPENSATION

See Item 10 herein.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

See Item 10 herein.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE

See Item 10 herein.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

See Item 10 herein.
PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Financial Statement Schedules: see Item 8 in Part II of this report.

(b) Exhibits: see accompanying exhibit index that precedes the signature page of this report.

ITEM 16. FORM 10-K SUMMARY

Omitted at Company's option.

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Exhibit Index

EXHIBIT INDEX

Exhibit

No.

Description

3.1

3.2

3.3

3.4

3.5

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

Memorandum of Association of Enstar Group Limited (incorporated by reference to Exhibit 3.1 to the
Company’s Form 10-K/A filed on May 2, 2011).

Sixth Amended and Restated Bye-Laws of Enstar Group Limited (incorporated by reference to Exhibit
3.1 to the Company’s Form 8-K filed on June 15, 2021).

Certificate of Designations of Series C Participating Non-Voting Perpetual Preferred Stock of Enstar
Group Limited, dated as of June 13, 2016 (incorporated by reference to Exhibit 3.1 to the Company's
Form 8-K filed on June 17, 2016).

Certificate of Designations of Series D Perpetual Non-Cumulative Preferred Shares of Enstar Group
Limited, dated as of June 27, 2018 (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K
filed on June 27, 2018).

Certificate of Designations of Series E Perpetual Non-Cumulative Preferred Shares of Enstar Group
Limited, dated as of November 21, 2018 (incorporated by reference to Exhibit 4.1 to the Company’s
Form 8-K filed on November 21, 2018).

Senior Indenture, dated as of March 10, 2017, between Enstar Group Limited and The Bank of New York
Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on March
10, 2017).

First Supplemental Indenture, dated as of March 10, 2017, between Enstar Group Limited and The Bank
of New York Mellon, as trustee (incorporated by reference to Exhibit 4.2 to the Company's Form 8-K filed
on March 10, 2017).

Second Supplemental Indenture, dated as of March 26, 2019, between Enstar Group Limited and The
Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-
K filed on March 26, 2019).

Third Supplemental Indenture, dated as of May 28, 2019, between Enstar Group Limited and The Bank
of New York Mellon, as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed
on May 28, 2019).

Fourth Supplemental Indenture, dated as of August 24, 2021, between Enstar Group Limited and The
Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-
K filed on August 24, 2021).

Junior Subordinated Indenture, dated as of August 26, 2020, among Enstar Finance LLC, Enstar Group
Limited and The Bank of New York Mellon, as trustee (incorporated by reference to exhibit 4.1 to the
Company's Form 8-K filed on August 26, 2020).

First Supplemental Indenture, dated as of August 26, 2020, among Enstar Finance LLC, Enstar Group
Limited and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.2 to the
Company's Form 8-K filed on August 26, 2020).

Second Supplemental Indenture dated as of January 14, 2022, among Enstar Finance LLC, Enstar
Group Limited and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.2 to
the Company's Form 8-K filed on January 14, 2022).

Deposit Agreement, dated as of June 27, 2018, between Enstar Group Limited and American Stock
Transfer (incorporated by reference to Exhibit 4.3 to the Company’s Form 8-K filed on June 27, 2018).

Deposit Agreement, dated as of November 21, 2018, between Enstar Group Limited and American Stock
Transfer (incorporated by reference to Exhibit 4.3 to the Company’s Form 8-K filed on November 21,
2018).

Description of Securities (incorporated by reference to Exhibit 4.7 to the Company's Form 10-K filed on
February 27, 2020).

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Exhibit Index

10.1

10.2

10.3

10.4

10.5

10.6+

10.7+

10.8+

Registration Rights Agreement, dated as of January 31, 2007, by and among Castlewood Holdings
Limited, Trident II, L.P., Marsh & McLennan Capital Professionals Fund, L.P., Marsh & McLennan
Employees’ Securities Company, L.P., Dominic F. Silvester, J. Christopher Flowers, and other parties
thereto set forth on the Schedule of Shareholders attached thereto (incorporated by reference to Exhibit
10.1 to the Company’s Form 8-K12B filed on January 31, 2007).

Registration Rights Agreement, dated as of April 20, 2011, by and among Enstar Group Limited, GSCP
VI AIV Navi, Ltd., GSCP VI Offshore Navi, Ltd., GSCP VI Parallel AIV Navi, Ltd., GSCP VI Employee
Navi, Ltd., and GSCP VI GmbH Navi, L.P. (incorporated by reference to Exhibit 99.3 to the Company’s
Form 8-K filed on April 21, 2011).

Registration Rights Agreement, dated April 1, 2014, among Enstar Group Limited, FR XI Offshore AIV,
L.P., First Reserve Fund XII, L.P., FR XII A Parallel Vehicle L.P., FR Torus Co-Investment, L.P. and
Corsair Specialty Investors, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K
filed on April 4, 2014).

Form of Waiver Agreement (incorporated herein by reference to Exhibit 4.7 to the Company's Form S-3
filed on October 10, 2017).

Shareholder Rights Agreement, dated June 3, 2015, between Enstar Group Limited and Canada
Pension Plan Investment Board (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K
filed on June 3, 2015.

Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company’s
Form S-3 (No. 333-151461) initially filed on June 5, 2008).

Amended and Restated Employment Agreement, dated July 1, 2022, between Enstar Group Limited and
Dominic F. Silvester (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on July
6, 2022).

Amended and Restated Employment Agreement, dated as of January 21, 2020, by and between Enstar
Group Limited and Paul J. O’Shea (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K
filed on January 27, 2020).

10.9+

Letter Agreement, dated July 6, 2022, between Enstar Group Limited and Paul O’Shea (incorporated by
reference to Exhibit 10.1 to the Company's Form 8-K filed on July 6, 2022).

10.10+

10.11+

10.12+

10.13+

10.14+

10.15+

10.16+

Amended and Restated Employment Agreement, dated January 21, 2020, by and between Enstar
Group Limited and Orla M. Gregory (incorporated by reference to Exhibit 10.4 to the Company’s Form 8-
K filed on January 27, 2020).

Amendment No. 1 to Amended and Restated Employment Agreement, dated September 16, 2021, by
and between Enstar Group Limited and Orla M. Gregory (incorporated by reference to Exhibit 10.1 to the
Company's Form 8-K filed on September 21, 2021).

Amendment No. 2 to the Amended and Restated Employment Agreement, dated July 1, 2022, between
Enstar Group Limited and Orla Gregory (incorporated by reference to Exhibit 10.4 to the Company’s
Form 8-K filed on July 6, 2022).

Employment Agreement, dated January 8, 2018, by and between Enstar Group Limited and Paul M.J.
Brockman (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on May 8, 2019).

Employment Agreement, dated September 9, 2016, by and between Enstar Group Limited and Nazar
Alobaidat (incorporated by reference to Exhibit 10.13 to the Company's Form 10-K filed on February 27,
2020).

Enstar Group Limited Deferred Compensation and Ordinary Share Plan for Non-Employee Directors,
effective as of June 5, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed
on June 11, 2007).

Amended and Restated Enstar Group Limited Deferred Compensation and Ordinary Share Plan for Non-
Employee Directors, effective as of January 1, 2015 (incorporated by reference to Exhibit 10.13 to the
Company’s Form 10-K filed on March 2, 2015).

10.17+

Form of Non-Employee Director Restricted Stock Award Agreement (incorporated by reference to Exhibit
10.32 to the Company’s Form 10-K filed on March 2, 2015).

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Exhibit Index

10.18+ Castlewood Holdings Limited 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.11 to
the proxy statement/prospectus that forms a part of the Company’s Form S-4 declared effective
December 15, 2006).

10.19+

10.20+

10.21+

10.22+

10.23+

10.24+

10.25+

10.26+

10.27+

First Amendment to Castlewood Holdings Limited 2006 Equity Incentive Plan (incorporated by reference
to Exhibit 10.2 to the Company’s Form 8-K filed on April 6, 2007).

Form of Stock Appreciation Right Award Agreement pursuant to the 2006 Equity Incentive Plan
(incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q filed on August 11, 2014).

Enstar Group Limited Amended and Restated 2016 Equity Incentive Plan, as amended (incorporated by
reference to Exhibit 10.1 to the Company’s Form 8-K filed on June 1, 2022).

Form of Restricted Stock Award Agreement under the Enstar Group Limited 2016 Equity Incentive Plan
(incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed on August 5, 2016).

Form of Performance Stock Unit Award Agreement (3-Year Cycle) (2020) under the Enstar Group
Limited 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Form 8-
K filed on January 27, 2020).

Form of Performance Stock Unit Award Agreement (Annual Cycle) (2020) under the Enstar Group
Limited 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.29 to the Company's Form
10-K filed on February 27, 2020).

Form of Restricted Stock Unit Award Agreement (2020) under the Enstar Group Limited 2016 Equity
Incentive Plan (incorporated by reference to Exhibit 10.30 to the Company's Form 10-K filed on February
27, 2020).

Form of Performance Stock Unit Award Agreement (2021) under the Enstar Group Limited 2016 Equity
Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed on May 7,
2021).

Joint Share Ownership Agreement, dated January 21, 2020, by and among Enstar Group Limited,
Dominic F. Silvester and Zedra Trust Company, as trustee (incorporated by reference to Exhibit 10.1 to
the Company’s Form 8-K filed on January 27, 2020).

10.28+ Deed of Amendment and Restatement to the Joint Ownership Agreement, dated July 1, 2022, between
Enstar Group Limited, Dominic F. Silvester and Zedra Trust Company (Guernsey) Limited, as trustee
(incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on July 6, 2022).

10.29+

10.30+

10.31s

10.32

10.33

10.34

Enstar Group Limited Amended and Restated Employee Share Purchase Plan (incorporated by
reference to Exhibit 10.4 to the Company’s Form 10-Q filed on November 8, 2016).

Enstar Group Limited 2022-2024 Annual Incentive Compensation Program (incorporated by reference to
Exhibit 10.1 to the Company’s Form 8-K filed on November 9, 2021).

Recapitalization Agreement, dated as of August 13, 2020, by and among North Bay Holdings Limited,
Enstar Group Limited, Kenmare Holdings Ltd., Trident V, L.P., Trident V Parallel Fund, L.P., Trident V
Professionals Fund, L.P., Dowling Capital Partners I, L.P., Capital City Partners LLC, and StarStone
Specialty Holdings Limited (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed
on August 17, 2020).

Voting and Shareholders' Agreement, dated as of January 1, 2021, among StarStone Specialty Holdings
Limited, Kenmare Holdings Ltd., Trident V, L.P., Trident V Parallel Fund, L.P., Trident V Professionals
Fund, L.P., Dowling Capital Partners I, L.P., and Capital City Partners LLC (incorporated by reference to
Exhibit 10.1 to the Company's Form 8-K filed on January 4, 2021).

Third Amended and Restated Shareholders' Agreement, dated as of January 1, 2021, among
Northshore Holdings Limited, Trident V, L.P., Trident V Parallel Fund, L.P., Trident V Professionals Fund,
L.P., Kenmare Holdings Ltd., Dowling Capital Partners I, L.P., Capital City Partners LLC, Atrium
Nominees Limited, and the other Persons who from time to time become a party thereto (incorporated by
reference to Exhibit 10.2 to the Company's Form 8-K filed on January 1, 2021).

Revolving Credit Agreement, dated as of August 16, 2018, by and among Enstar Group Limited and
certain of its subsidiaries, National Australia Bank Limited, Barclays Bank PLC, Wells Fargo Bank,
National Association and each of the lenders party thereto (incorporated by reference to Exhibit 10.1 to
the Company’s Form 8-K filed on August 21, 2018).

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Exhibit Index

10.35

10.36

10.37s

10.38

10.39

10.40

10.41

10.42

10.43

10.44

First Amendment to Revolving Credit Agreement, dated as of December 19, 2018, by and among Enstar
Group Limited and certain of its subsidiaries, National Australia Bank Limited, Barclays Bank PLC, Wells
Fargo Bank, National Association and each of the lenders party thereto (incorporated by reference to
Exhibit 10.38 to the Company’s Form 10-K filed on March 1, 2019).

Second Amendment to Revolving Credit Agreement, dated as of November 25, 2020, by and among
Enstar Group Limited and certain of its subsidiaries, National Australia Bank Limited, Barclays Bank
PLC, Wells Fargo Bank, National Association, and each of the lenders party thereto (incorporated by
reference to Exhibit 10.45 to the Company's Form 10-K filed on March 1, 2021).

Third Amendment to Revolving Credit Agreement, dated as of March 31, 2021, by and among Enstar
Group Limited and certain of its subsidiaries, National Australia Bank Limited, Barclays Bank PLC, Wells
Fargo Bank, National Association, and each of the lenders party thereto (incorporated by reference to
Exhibit 10.2 to the Company's Form 10-Q filed on May 7, 2021).

Fourth Amendment to Revolving Credit Agreement, dated as of November 16, 2021, by and among
Enstar Group Limited and certain of its subsidiaries, National Australia Bank Limited, Barclays Bank
PLC, Wells Fargo Bank, National Association, and each of the lenders party thereto (incorporated by
reference to Exhibit 10.1 to the Company's Form 10-Q filed on May 5, 2022).

Letter of Credit Facility Agreement, dated as of August 5, 2019, by and among Enstar Group Limited and
certain of its subsidiaries, National Australia Bank Limited, London Branch, The Bank of Nova Scotia and
each of the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K
filed on August 7, 2019).

First Amendment to Letter of Credit Facility Agreement, dated as of December 9, 2019, by and among
Enstar Group Limited and certain of its subsidiaries, National Australia Bank Limited, London Branch,
The Bank of Nova Scotia and each of the lenders party thereto (incorporated by reference to Exhibit 10.1
to the Company’s Form 8-K filed on December 11, 2019).

Second Amendment to Letter of Credit Facility Agreement, dated as of June 3, 2020, by and among
Enstar Group Limited and certain of its subsidiaries, National Australia Bank Limited, London Branch,
The Bank of Nova Scotia and each of the lenders party thereto (incorporated by reference to Exhibit 10.1
to the Company's Form 8-K filed on June 9, 2020).

Third Amendment to Letter of Credit Facility Agreement, dated as of November 25, 2020, by and among
Enstar Group Limited and certain of its subsidiaries, National Australia Bank Limited, London Branch,
The Bank of Nova Scotia and each of the lenders party thereto (incorporated by reference to Exhibit
10.49 to the Company's Form 10-K filed on March 1, 2021).

Fourth Amendment to Letter of Credit Facility Agreement, dated as of March 31, 2021, by and among
Enstar Group Limited and certain of its subsidiaries, National Australia Bank Limited, London Branch,
The Bank of Nova Scotia and each of the lenders party thereto (incorporated by reference to Exhibit 10.3
to the Company's Form 10-Q filed on May 7, 2021).

Fifth Amendment to Letter of Credit Facility Agreement, dated as of August 16, 2021, by and among
Enstar Group Limited and certain of its subsidiaries, National Australia Bank Limited, London Branch,
The Bank of Nova Scotia and each of the lenders party thereto (incorporated by reference to Exhibit 10.4
to the Company's Form 10-Q filed on November 4, 2021).

10.45s

Termination and Release Agreement, dated as of February 21, 2021, by and among Enstar Group
Limited and certain of its subsidiaries and Hillhouse Capital Management, Ltd. and certain of its affiliates
(incorporated by reference to Exhibit 10.50 to the Company's Form 10-K filed on March 1, 2021).

10.46

10.47

10.48

Purchase Agreement dated as of July 15, 2021 by and among Enstar Group Limited, HHLR Fund, L.P.,
YHG Investment, L.P. and Hillhouse Fund III, L.P. (incorporated by reference to Exhibit 10.1 to the
Company's Form 8-K filed on July 15, 2021).

Purchase Agreement dated as of July 15, 2021 by and among Cavello Bay Reinsurance Limited and HH
ENZ Holdings, Ltd. (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on July
15, 2021).

Purchase Agreement, dated as of May 10, 2022, by and between Trident Public Equity LP and Enstar
Group Limited (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 11,
2022).

16.1

Letter of KPMG, dated March 21, 2022 (incorporated by reference to Exhibit 16.1 to the Company’s
Form 8-K filed on March 21, 2022).

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Exhibit Index

18.1*

21.1*

22.1*

23.1*

23.2*

23.3*

31.1*

31.2*

32.1**

32.2**

99.1*

101*

104*

Preferability Letter.

List of Subsidiaries.

List of Subsidiary Issuers of Guaranteed Securities.

Consent of PricewaterhouseCoopers LLP.

Consent of KPMG Audit Limited.

Consent of Ernst & Young Australia.

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities
Exchange Act of 1934 as adopted under Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities
Exchange Act of 1934 as adopted under Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

Financial Statements of InRe Fund, L.P. for the fiscal year ended December 31, 2020.

Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II,
Item 8 of this Annual Report on Form 10-K.

The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31,
2021, formatted as Inline XBRL (included in Exhibit 101).

____________________________________________________________________________________________

filed herewith

** furnished herewith

+ denotes management contract or compensatory arrangement
s

certain of the schedules and similar attachments are not filed but Enstar Group Limited undertakes to furnish a copy of the schedules or
similar attachments to the SEC upon request

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Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 1, 2023.

ENSTAR GROUP LIMITED

By: /S/ DOMINIC F. SILVESTER
Dominic F. Silvester
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities indicated on March 1, 2023.

Signature

/s/ ROBERT J. CAMPBELL
Robert J. Campbell

/s/ DOMINIC F. SILVESTER
Dominic F. Silvester

/s/ ORLA GREGORY
Orla Gregory

/s/ MICHAEL P. MURPHY
Michael P. Murphy

/s/ PAUL J. O’SHEA
Paul J. O’Shea

/s/ B. FREDERICK BECKER
B. Frederick Becker

/s/ SHARON A. BEESLEY
Sharon A. Beesley

/s/ JAMES D. CAREY
James D. Carey

/s/ SUSAN L. CROSS
Susan L. Cross

/s/ HANS-PETER GERHARDT
Hans-Peter Gerhardt

/s/ MYRON HENDRY
Myron Hendry

/s/ HITESH PATEL
Hitesh Patel

/s/ POUL A. WINSLOW
Poul A. Winslow

Title

Chairman and Director

Chief Executive Officer and Director

Chief Financial Officer (signing in her capacity as
Principal Financial Officer) and Director

Deputy Chief Financial Officer (signing in his capacity as
Principal Accounting Officer)

President and Director

Director

Enstar Group Limited | 2022 Form 10-K

257

For explanatory notes and a reconciliation to the most directly comparable GAAP measure for the years ended December 31, 2022, 2021 and 2020 refer to
pages 64 – 70 of our Annual Report on Form 10-K for the year ended December 31, 2022.

The tables below present a reconciliation to the most directly comparable GAAP measure for the years ended December 31, 2019 and 2018.

Reconciliation to Adjusted Book Value Per Share
(in millions of U.S. dollars)

Book value per ordinary share

Non-GAAP adjustments:

Share-based compensation plans

Warrants

For the Year Ended December 31,

2019

2018

Equity1

Ordinary
Shares

Per Share
Amount

Equity1

Ordinary
Shares

Per Share
Amount

$4,490

21,511,505

$208.73

$3,546

21,459,997

$165.23

—

302,565

175,901

—

245,165

175,901

Adjusted book value per ordinary share*

$4,510

21,989,971

$205.11

$3,566

21,881,063

$162.98

1 Equity comprises Enstar ordinary shareholders’ equity, which is calculated as Enstar shareholders’ equity less preferred shares ($510 million as of December 31, 2019 and 2018, respectively), prior to any non-GAAP adjustments.

* Non-GAAP financial measure.

258

Financial CalculationsReconciliation of GAAP to Non-GAAP Measures

Reconciliation to Adjusted Return on Equity
(in millions of U.S. dollars)

For the Year Ended December 31,

2019

2018

Net
earnings1

Opening
Equity1,6

(Adj)
ROE

Net (loss)
earnings1

Opening
Equity1,6

(Adj)
ROE

Net (loss) earnings/Opening equity/ROE1

$906

$3,546

25.5 %

$(166)

$3,295

(5.0) %

Non-GAAP adjustments:

Net realized and unrealized losses (gains) on fixed maturity
investments and funds held - directly managed / Unrealized (losses)
gains on fixed maturity investments and funds held - directly managed2

Change in fair value of insurance contracts for which we have elected
the fair value option / Fair value of insurance contracts for which we
have elected the fair value option3

Amortization of fair value adjustments / Fair value adjustments

Net earnings from discontinued operations / Net assets of entities
classified as held for sale and discontinued operations

Tax effects of adjustments4

Adjustments attributable to noncontrolling interest5

(516)

227

237

(101)

117

(7)

(36)

(224)

(199)

(210)

(1)

(183)

(104)

(157)

Adjusted net (loss) earnings/Adjusted opening equity/Adjusted ROE*

$602

$3,206

18.8%

$69

$2,815

2.4%

1 Net (loss) earnings comprises net (loss) earnings attributable to Enstar ordinary shareholders, prior to any non-GAAP adjustments. Opening equity comprises Enstar ordinary shareholders’ equity, which is calculated as
opening Enstar shareholders’ equity less preferred shares ($510 million as of December 31, 2018), prior to any non-GAAP adjustments.

2 Represents the net realized and unrealized gains and losses related to fixed maturity securities. Our fixed maturity securities are held directly on our balance sheet and also within the “Funds held - directly managed” balance.

3 Comprises the discount rate and risk margin components.

4 Represents an aggregation of the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates, calculated at the applicable jurisdictional tax rate.

5 Represents the impact of the adjustments on the net earnings (loss) attributable to noncontrolling interests associated with the specific subsidiaries to which the adjustments relate.

6 The 2017 and 2018 balance sheets have not been restated to reflect the impact of the 2020 StarStone U.S. discontinued operations classification.

* Non-GAAP financial measure.

259

Financial CalculationsReconciliation of GAAP to Non-GAAP Measures

Reconciliation to Adjusted Run-off Liability Earnings
(in millions of U.S. dollars)

PPD/Net loss reserves/RLE

Non-GAAP Adjustments:

Net loss reserves - current period

Legacy Underwriting

Amortization of fair value adjustments / Net fair value
adjustments associated with the acquisition of companies

Changes in fair value - fair value option / Net fair value adjustments
for contracts for which we have elected the fair value option1

Change in estimate of net ultimate liabilities - defendant A&E /
Net nominal defendant A&E liabilities

Reduction in estimated future expenses - defendant A&E /
Estimated future expenses - defendant A&E

Year Ended
December 31,
2019

As of December 31,
2018

2019

Year Ended
December 31,
2019

PPD

Net Loss
Reserves

Net Loss
Reserves2

Average net
loss Reserves2

RLE%

$ 7,941

$7,341

$7,641

0.1 %

—

106

(401)

(842)

—

(201)

(1,162)

(1,002)

152

199

176

117

130

244

561

187

323

Adjusted PPD/Adjusted net loss reserves/Adjusted RLE*

$285

$7,593

$6,726

$7,160

4.0 %

1 Comprises the discount rate and risk margin components.
2 The 2018 balance sheet has not been restated to reflect the impact of the 2020 StarStone U.S. discontinued operations classification.
* Non-GAAP financial measure.

260

Financial CalculationsReconciliation of GAAP to Non-GAAP Measures

Reconciliation to Adjusted Run-off Liability Earnings
(in millions of U.S. dollars)

Year Ended
December 31,
2018

As of December 31,
2017

2018

Year Ended
December 31,
2018

PPD/Net loss reserves/RLE

Non-GAAP Adjustments:

Net loss reserves - current period

Legacy Underwriting

Amortization of fair value adjustments / Net fair value
adjustments associated with the acquisition of companies

Changes in fair value - fair value option / Net fair value adjustments
for contracts for which we have elected the fair value option1

Change in estimate of net ultimate liabilities - defendant A&E /
Net nominal defendant A&E liabilities

Reduction in estimated future expenses - defendant A&E /
Estimated future expenses - defendant A&E

PPD

$223

—

115

—

Net Loss
Reserves2

Average net
loss Reserves2

$7,341

$5,528

$6,435

RLE%

3.5 %

(357)

(818)

—

(946)

(179)

(882)

199

103

151

244

183

113

—

213

Adjusted PPD/Adjusted net loss reserves/Adjusted RLE*

$375

$6,713

$4,981

$5,847

6.4 %

1 Comprises the discount rate and risk margin components.
2 The 2017 and 2018 balance sheets have not been restated to reflect the impact of the 2020 StarStone U.S. discontinued operations classification.
* Non-GAAP financial measure.

261

Financial CalculationsReconciliation of GAAP to Non-GAAP Measures

Directors

ROBERT CAMPBELL
Chairman of the Board
Enstar Group Limited
Partner
Beck Mack & Oliver, LLC

DOMINIC SILVESTER
Chief Executive Officer
Enstar Group Limited

B. FREDERICK (RICK) BECKER
Non-Executive Director

SHARON A. BEESLEY
Founder – BeesMont Group
Chief Executive Officer
Beesmont Law Limited

JAMES CAREY
Managing Director
Stone Point Capital LLC

SUSAN L. CROSS
EVP, Global Chief Actuary (former)
XL Group (now AXA XL)

HANS-PETER GERHARDT
Chief Executive Officer (former)
AXA Re, PARIS Re and Asia Capital Reinsurance

ORLA GREGORY
President
Enstar Group Limited

W. MYRON HENDRY
Executive VP,
Chief Platform Officer (former)
XL Group (now AXA XL)

PAUL O’SHEA
President (former)
Enstar Group Limited

HITESH PATEL
Non-Executive Director

POUL WINSLOW
Senior Managing Director & Global Head
of Capital Markets and Factor Investing (former)
Canada Pension Plan Investment Board

Executive Officers

DOMINIC SILVESTER
Chief Executive Officer

ORLA GREGORY
President

NAZAR ALOBAIDAT
Chief Investment Officer

PAUL BROCKMAN
Chief Operating Officer &
Chief Claims Officer

MATTHEW KIRK
Chief Financial Officer

DAVID NI
Chief Strategy Officer

LAURENCE PLUMB
Chief of Business Operations

AUDREY TARANTO
General Counsel

SEEMA THAPER
Chief Risk Officer

Transfer agent

AMERICAN STOCK TRANSFER
& TRUST COMPANY
6201, 15th Avenue,
Brooklyn,
NY 11219
(800) 937-5449

Enstar Group Limited

HEAD OFFICE
P.O. Box HM 2267,
Windsor Place, 3rd Floor,
22 Queen Street,
Hamilton HM JX,
Bermuda

enstargroup.com